Compass points to organic growth
Compass, the acquisitive catering company, brushed aside a downbeat outlook from its competitors yesterday as it revealed plans to focus on organic growth.
The group, which owns food service brands such as Little Chef, Upper Crust and Harry Ramsden's, said it anticipated "slow growth" over the next 12 months. Analysts said this compared favourably with last week's profits warning from its French rival Sodexho.
Francis Mackay, the Compass chairman, said the US economy had "plateaued", the UK was "steady" and growth in the rest of Europe would be slow. Mr Mackay blamed the company's weak share price history on the "background noise" in the sector, adding that the group was confident about the second half. The shares fell 16p to 425p.
Compass reported a 7 per cent rise in underlying sales for the six months to 31 March, within its target range of 6 to 9 per cent growth. Pre-tax profits of £258m compared with £234m a year earlier were ahead of market expectations, while turnover rose 23 per cent to £5bn. Michael Bailey, the chief executive, said the group expected future acquisition activity to be minimal. He ruled out any interest in Diageo's Burger King or Brake Brothers, the catering group, as making "no strategic sense".
Compass continued to defy the trend of falling sales at motorway service stations with a 6 per cent rise across its rebranded Moto estate. "We have added 200 branded outlets over the last 18 months [and are] seeing growth from people who were not stopping to buy food before," Mr Bailey said.
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