The market seems to have forgiven Compass (CPG) for its summertime woes after a bullish first quarter trading statement sends shares in the catering giant up 4.8% to £12.30.

Organic revenue grew by 5.9% in the three months to 31 December, driven by new business and good retention rates.

Like-for-like sales have also increased as a result of modest pricing and some volume improvement.

It’s a good turnaround for the group which saw its shares hit a low of 991p in the summer after it warned a restructuring plan would weigh on margins.

CPG - Comparison Line Chart (Rebased to first)

The plan aims to reduce costs in Compass’ offshore and remote business and in some emerging markets, where growth has been subdued. The restructuring is on track and overall margins are expected to be flat this year.

Compass says its outlook for 2016 remains positive. ‘Growth in North America is strong, Europe is improving, and we are managing the challenges in the rest of world region,’ it says.

Panmure Gordon forecasts pre-tax profit of £1.2 billion in the year to September 2015, up 3.3% from the previous year. The analyst has a ‘hold’ rating and £11.00 price target, 10.6% lower than the current level.

Issue Date: 04 Feb 2016