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Compass cautious over trading prospects

28 March 2006

Compass Group followed its announcement of a new chief executive last Friday with a restrained trading update today.

In a statement to the City, it said: "We anticipate the group will trade in line with expectations for the six months to 31 March 2006."

In the UK, state education remained the most challenging sector for the company where clients are increasingly demanding healthier eating.

The caterer said the majority of its restructuring costs relating to a move to achieve £50m in overhead savings would be incurred in the first half of the year.

Compass reiterated that its SSP travel concession business would be sold by the middle of 2006. "We continue to see good underlying growth in the business, particularly in Europe," it said.

Trading in North America remained strong.

City commentators gave the update a muted reaction, with one analyst saying that it added nothing new.

Richard Singleton, director of corporate governance at institutional investor F&C, said: "This is a fairly standard holding statement."

Meanwhile the appointment of Richard Cousins, the former boss of plasterboard company BPB, as its new £750,000-a-year chief executive has been broadly welcomed by the City.

Panmure Gordon analyst Mike Murphy said: "This should herald a welcome culture change at Compass. The company is in need of leadership to restore its reputation with stakeholders."

by Tom Bill

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