Compass boosts annual profits despite fall in sales

25 November 2009 by
Compass boosts annual profits despite fall in sales

Contract catering giant Compass Group has warned that it is unlikely to see a return to sales growth in the coming year as the global economic downturn continues to affect corporate hospitality.

Compass, which operates across 55 countries and holds UK contracts with the Bank of England and Royal Mail, said comparable sales volumes fell by 6% in the fourth quarter.

However, the drop in sales failed to halt annual profits, which rose by more than a third following new business wins, a weak pound and cost cutting.

Pre-tax profit for the 12 months to 30 September rose by 36.6% to £773m, up from £566m last year, lifting the group's shares to their highest scale in more than seven years. Revenue rose 17% to £13.4b.

Sales in the UK and Ireland, which account for 13.6% of Compass's group revenues, dropped 5% to £1.8b.

Compass chief executive Richard Cousins said the company had delivered "an excellent performance in a challenging environment".

"Consistently high levels of net new business and a step change in operating efficiency, generating £161m of savings, have contributed to a further £100m of profit growth and 60 basis points of margin growth," he said.

"While in the short term the prevailing economic conditions are likely to continue to impact organic revenue growth, the pipeline of new business looks strong.

"Furthermore, the considerable potential to deliver ongoing efficiencies underpins our expectation of further progress in the margin."

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Compass Group sees full-year profits rise by nearly 30% >> By Janie Stamford

E-mail your comments to Janie Stamford here.

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