Compass gets taste for strong half-year profit

Compass, the world's biggest contract caterer, said the weak pound and strong demand for its services at education and healthcare organisations globally helped to deliver profitability "well ahead of expectations" in its first half.

It said that buoyant revenue growth in North America and in countries such as Australia more than offset weakness in its UK business, where it was hit by a decline in corporate hospitality in the automotive industry and leisure sectors.

Richard Cousins, the group chief executive of Compass, which operates in 55 countries, said: "The UK has a big exposure to the automotive industry. It stopped for the extended Christmas period and it had a tough trading period during the snow in February." However, Compass signed a landmark deal last month with the Jockey Club, which operates 14 racecourses in the UK, to provide it with food services, in deal that will be worth £500m over 10 years. Mr Cousins said: "We still have a healthy pipeline of new business [globally]."

Over the six months to 31 March, Compass said its organic revenue growth, including new business and like-for-like sales growth, is expected to be about 2.5 per cent. It said that underlying revenue in the education, healthcare and remote site sectors has continued to perform robustly.

Compass said it expects a favourable impact of about £70m on its operating profit, largely from the depreciation of sterling against the dollar over the period. In the UK, it expects overall revenues to be 4 per cent lower. Mr Cousins said companies had cut back "a little bit" on corporate hospitality, such as Twickenham for rugby and Wimbledon for tennis.

It expects an improvement of 50 basis points in its operating margin over the half year, with all its four geographical regions contributing to the strong performance.