Foodservice company Compass Group has reported a fall in profits to £124m (US$227m) in the six months ended 31 March, compared with £145m in the same period a year earlier as rising costs hit income in its UK operations
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The fall was despite a rise in turnover to £6.191bn from £5.844bn a year ago.
“I am not happy with our recent performance,” said chief executive Michael J Bailey. “We need to respond more rapidly than we have to the changes taking place in our market. The business review I have initiated has already identified an initial set of actions in terms of operational efficiency, for example on overheads. The review is on-going and we will evaluate all opportunities to extract maximum value from Compass Group.”
The company said turnover growth was in line with expectations. “Turnover continues to be driven by new business wins and high levels of contract retention in the group’s primary contract catering business,” it said. “This growth has been particularly strong in North America, the UK, Australasia and Latin America. Performance in continental Europe and elsewhere has been mixed and in some areas remains very challenging.”
In the UK total operating profit (excluding associates and goodwill amortisation) on continuing activities was £89m, compared with £122m in the same period in 2004. The company blamed the fall on factors including increased distribution costs, higher
pension charges, accounting changes and a more accurate allocation of purchasing income and central costs.
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