Compass Group's operating profit remains flat

24 November 2010 by
Compass Group's operating profit remains flat

Compass Group‘s operating profit for the 12 months to 30 September 2010 has remained flat at £114m in the UK as a result of a slowdown in decline for the second half of the year.

Despite starting the financial period with a decline in organic revenue of 5.7% for the six months to 31 March, the caterer's UK and Ireland business reported a decline of 1% for the second half of the year. Revenue for 2010 was £1.78b, down 3.3% on 2009 (£1.82b).

The company said that this fall in decline was driven by a slight acceleration in new business wins and an improvement in the rate of contract retention, despite its business and industry and sports and leisure sectors being affected most by challenging economic conditions.

Compass reported a number of significant wins in the last 12 months, including a contract to cater for 10,000 Virgin Media employees across 17 locations, a prestigious £1.5m a year deal at Rugby School, Warwickshire, and a £14m contract at London's Barbican Centre.

However, it has also suffered some major contract blows such as a lucrative staff-catering deal at British Airways, which was lost to OCS after retaining it for 28 years.
Business in North America and the rest of the world - excluding continental Europe - fared considerably better with organic revenue growth of 5.8% and 6.1% respectively, which resulted in a total group average of 3.2%.

Chief executive Richard Cousins described this year's "strong performance" as encouraging and said that Compass is using its cash flow to make infill acquisitions and to reward its shareholders.

The company has already made four acquisitions in the last six months, with Danish food service firm IDA bought for DKK148m (£17m) last month.

Cousins added: "Looking forward, Compass is well placed to exploit the significant structural growth opportunity in both food and support services around the world.

"The pipeline of new business is strong and in an environment where cost efficiency remains high on the agenda, we believe the benefits of outsourcing are clear."

Compass reports slowdown in decline of revenue growth >>

Compass acquires IDA Service for £17m >>

Ian Sarson outlines a new direction for Compass >>

By Janie Stamford

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