Compass revenues head in right direction

CATERING giant Compass today said revenues were growing for the first time in more than a year after "clear signs of stabilisation" in its business and sports arms.

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.

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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."