UK-based catering group Compass has said it expects its full-year profits to be dented by its UK operations and weak trading conditions in Continental Europe.
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For the year to 30 September 2004 the company expects like-for-like turnover growth of 7%.
However, the company said that for 2004 and onward, operating profit would be dented by its UK operations. Compass said one of its major distributors in the UK has experienced financial difficulties and the group is transferring this business to an alternative major distributor, a process that will incur additional costs in 2004 and higher ongoing costs as a result of switching to the new distributor.
“Also in the UK, a number of contracts with Local Education Authorities awarded over the past two years are failing to deliver the margins we anticipated due to increased labour costs and lower than expected throughput, allied to pressure on school meals budgets from these clients,” Compass said.
In addition, trading conditions over the summer in Continental Europe, particularly France and the Netherlands, have been disappointing, the company said.
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