Caterer fears strong pound will eat into revenues

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​Compass, the largest caterer in the world, said the strong pound will take a £1.2​bn bite out of its revenues for the year to September 30.

​The ​company, which provides meals for schools, work canteens and major sporting events such as Wimbledon, expects sterling’s strength against most of the key currencies it trades in to have a 6.7​ per cent​ impact compared with 2013 results and to lower operating profits by ​seven per cent​ or £89​m.

Excluding the currency impact, Compass forecasts sales growth of ​four per cent​, partly due to a strong fourth quarter performance from its US and emerging markets businesses and continued improvement in Europe and Japan.

​B​rokers at Shore Capital held their forecast for pre-tax profits of £1.1​bn on November 26, down 3.3​ per cent​ on a year ago.

Analysts at Numis Securities added: “Compass has reported another good performance in the fourth quarter and a very solid pre-close update.”

In Europe and Japan, it said it had completed the exit of a number of contracts as a result of a 2012 cost-cutting programme, adding that although volumes are still negative they are falling at a slower rate.

It expects an overall sales decline in the year in these markets of 1.5​ per cent​, half of last year’s rate.

But in the US the group said it saw strong growth in the first half of the year, accelerated in the second half by new business wins and contract retention.

The US market showed good growth in the healthcare and the sports and leisure sectors, meaning the group expects to see organic sales growth of around 6.5​ per cent​ from North America.

Compass forecasts ​eight per cent​ growth from emerging and fast growing markets.

It said growth in these markets was good due to a large-scale shift towards outsourcing.