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Business News

Compass and Britvic shake off recession

Two major UK companies in the food and drink industry today provided some relief in the business gloom.

Compass, the world's biggest catering group, today reported a sharp rise in profits and said an overhaul of its UK arm was starting to show benefits.

Underlying pre-tax profits for the year to September 30 jumped 33 per cent to £589 million after revenues grew to £11.4 billion - an increase of 5.9 per cent on an organic basis - and the company improved efficiency.

In the UK, operating profits edged up £1 million to £108 million as a new management team ditched loss-making and low margin contracts and focused efforts on improving service and controlling costs.

Major contract wins and renewals have included the Bank of England, Asda and its joint venture contract to provide food service to Royal Mail employees.

Compass said of the UK division: "The restructuring we have seen in the business over recent years is beginning to show benefits."

Shares in the company rose more than 5 per cent after chief executive Richard Cousins said the new financial year had started well, with an encouraging pipeline of future sales.

He added: "We are continuing to deliver good organic revenue growth and operating efficiency. In the context of a more challenging economic environment we are not complacent."

Meanwhile, the soft drinks maker Britvic reported a 14 per cent increase in full-year pretax profit and said each of its key brands had gained market share, outperforming the broader market.

Britvic, whose brands include Tango, Robinsons squash, and R Whites lemonade, said pretax profit for the year to Sept. 28 was £ 70.1 million compared with £61.3 million the previous year.

That was at the top end of expectations which ranged between £59 million pounds and £71 million pounds, according to a Reuters Estimates poll of nine analysts.

"This is a strong performance achieved despite very challenging trading and cost environments," said Chief Executive Paul Moody.

Britvic, which is Britain's second biggest soft drinks maker behind Coca-Cola Enterprises, said it had seen particular growth in Great Britain from Robinsons and its Fruit Shoot juice drink, as well as Pepsi, which it has the rights to sell in the UK and Ireland.

Sales had also been boosted by new launches such as the Gatorade sports drink, Drench water, and Pepsi Raw, a new cola drink, it said.

Britivic said conditions in the soft drink market had been tough at the beginning of the new financial year, but it had been reassured with its performance since the year end.

The company is paying a final dividend of 8.8p per share, making a total dividend of 12.6p, up 14.5 per cent.