Compass heads in right direction

Published on Wednesday 14 May 2008 21:44

COMPASS Group, the world's biggest caterer, beat forecasts with a 29 per cent rise in first-half profit yesterday and unveiled plans to buy back £400 million of its shares over 18 months.

Compass, which employs about 5,000 staff in Scotland as part of its 350,000-strong worldwide workforce, said it was confident about the rest of the year, and was coping with higher food costs by changing menus, cutting waste and raising prices.

Chairman Sir Roy Gardner said: "We believe that we have a well-balanced and sustainable business model which has the capacity to drive continued revenue and margin growth over the medium term."

Panmure analyst Mike Murphy, keeping a "buy" rating on Compass shares, said: "Compass continues to serve up good news, and this looks like it will continue."

Compass, which counts the Bank of England among its customers, said it made a profit before tax and one-off items of 289 million in the six months to 31 March. Revenues rose 7.9 per cent to 5.6 billion, with strong growth in Europe, Australia and Japan offsetting a rise of just 1 per cent in the UK.

The firm also raised its interim dividend by 11 per cent to 4p a share and said the share buyback – in the middle of analysts' forecast range of 300m to 500m – would leave it room to make small acquisitions.