Compass on course to hit targets

By JONATHAN PRYNN FOR MAILONLINE
Updated:

 

CATERING giant Compass said that it had survived the impact of the Iraq war, the Sars outbreak and the economic slump in continental Europe and is on course to meet City targets.

Chief executive Michael Bailey admitted that 2003 was proving 'a challenging year' but said its huge diversity of businesses had helped it through the stormy market conditions.

In a trading statement prior to its close period, Bailey said the Harry Ramsden's chippies-to-Pentagon staff contract catering giant was on course for 6% turnover growth for the year, despite the difficulties facing the world economy.

He added: 'The effect of weak global economies has been exacerbated by a decline in travel resulting from the war in Iraq and Sars. As the year progressed, the macroeconomic backdrop continued to deteriorate in continental Europe, as the French and German economies continued to deteriorate.'

The company, which last week linked up with celebrity chef Gary Rhodes, has seen its margins improve by between

0.2% and 0.3%, while free cashflow for the year is likely to be around 15% higher at £400m. Pre-tax profits will be in line with expectations.

Results for the year to the end of September will be published on 2 December.

Bailey added that he was confident about prospects for the new financial year. The company had already secured half the turnover needed to deliver 6% like-for-like growth in 2004. Further margin growth of 0.2%-0.3% is expected.

The group revealed the link-up with Rhodes, 43, on Friday when the spiky-haired chef said he was launching a new restaurant in the City's tallest building, the old NatWest tower - now known as Tower 42. He will cook 'traditional British fare with a twist' at a restaurant called Rhodes Twenty Four.

Compass, which employs 375,000 staff in 90 countries, also said it had spent around £200m on acquisitions in 2003. Recent contract wins include a £4m-a-year deal with Reading Football Club and an £11m-a-year contract with the Army Training Estate. Compass shares rose 5 3/4p to 354 1/4p.

'Net growth in each of the divisions continues to be strong, reinforcing the significant growth potential in contract food service, particularly in healthcare and education,' the company said.

Compass sold its Travelodge hotels and Little Chef restaurants earlier this year to focus on its core catering business.

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