Compass revenues head in right direction

The company has landed deals with blue-chips such as BSkyB and Lloyds Banking Group and caters for a host of venues including the Jockey Club's racecourses, Chelsea football club and the Wimbledon tennis championships.

Compass posted underlying revenue growth of 1.5% in the opening quarter of 2010 - its first since the last three months of 2008 - as more cyclical sports and corporate business improved and trading comparisons eased.

The firm saw "steady" trading from its raft of public sector deals in health, defence and education, as well as boosting margins through cost-cutting.

Compass operates in 55 countries and employs 360,000 people. The firm, which has around a third of the FTSE 100 Index as clients, serves up around four billion meals a year and sells 4.5 cold drinks each second.

The group expects revenues for the first half to be "broadly flat" after a 1.7% decline in the first quarter of its financial year, although it predicts "modest growth" for the second half.

Sales in the UK and Ireland were around 6% below the previous year - its worst performing region - while Compass also flagged up stuttering first-half sales in continental Europe.

But the group also expects 2% growth in North America and a 1% sales climb from its rest of the world business after strong performances in Australia, Japan and Brazil during the first half.

Shares in Compass were up 1% following the update. Cazenove analyst Tim Barrett said: "In our opinion the trading trends are likely to get progressively better as the US labour market improves and employment levels enhance growth rather than represent a tailwind as they did in 2009."