Catering giant Compass has seen its share price plummet by more than six per cent this morning following the announcement of its half-year results.
The FTSE 100 group’s operating margin declined slightly to 7.5 per cent, despite an efficiency drive that aimed to boost profits.
Chief executive officer (CEO) Dominic Blakemore said: “Our continuous focus on efficiencies and pricing was offset by inflation and cost of change actions in the UK. As a result, our group operating margin declined slightly in the half. However, the benefits of these actions will come through in the second half.”
The group’s revenue was £11.4bn, down from £11.5bn in the same period last year, while profit also fell from £877m, to £853m.
Russ Mould, investment director at AJ Bell, said: “Catering giant Compass is often vaunted by investors for its consistent track record of success so when it fails to deliver it’s not a big surprise to see the company harshly punished by the market.”
Mould said that operating margin had been earmarked as a priority by the group's management, so failure to improve profitability was a big black mark.
“The operating margin fell 10 basis points in the period to 7.5 per cent. Despite the relatively downbeat results, the first to be reported under new chief executive Dominic Blakemore, Compass says it is on track to meet full year expectations. Today’s share price reaction suggests the market is not convinced,” Mould said.
Blakemore concluded: “I am excited about the significant structural growth opportunities globally and the long-term potential for further revenue growth, margin improvement, as well as continued returns to shareholders.”
Blakemore was appointed to lead Compass in January after the tragic death of previous CEO Richard Cousins in a plane crash in Australia.
Cousins was killed in the seaplane crash in Sydney Harbour alongside four members of his family on New Year’s Eve.