Compass issues upbeat forecast

Compass Group has forecast a hearty 6% jump in turnover for 2005.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>

Six weeks before its half-year results, the contract catering giant said the increase had been driven by new contract wins and a high level of client retention.

Chief executive Mike Bailey said: "I see 2005 as an important year for the business. Our focus is firmly on putting the necessary actions in place to deliver strong, free cash-flow generation and improving return on capital employed over the medium term."

In the UK, like-for-like turnover will meet the group's expectations on the back of steady growth in its contract and concession businesses.

The group, which employs 400,000 people in 90 countries, plans to spend £9m boosting its front-line management operation.

In the rest of the world the picture is more mixed.

Margins will be lower in the Middle East as the group stops charging high-risk premiums for running contracts in combat zones. As a result, profit for the year is expected to be £15m lower than originally anticipated.

Problems also continue in northern Europe, a market which the group described as "very challenging".

But profit is expected to be in line with expectations in North America, which the group said was performing well.

by Tom Bill

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