COMPASS, the catering and services giant, yesterday announced aggressive measures to shrink operations in Southern Europe by a quarter in the face of worsening economic conditions in the crisis-hit region.
The group, which is providing catering at this weekend’s Ryder Cup golf competition in Chicago, reported a positive fourth quarter overall, led by strong growth in North America and in emerging markets.
But conditions in Europe, particularly in Italy, Portugal and Spain, continued to deteriorate in the second half and suffered like-for-like volume declines of five per cent.
Compass did not disclose how many people are likely to lose their jobs as a result of the restructuring but said revenues from its southern European operations will be cut to about £600m from £800m “to protect profitability”.
It will take exceptional cash costs of £100m in 2012 and £50m in 2013, and said it will generate savings of £75m a year by 2014.
Chief executive Richard Cousins said the group will exit a series of non-profitable contracts such as motorway services in Portugal, where the introduction of tolls by the government has priced some drivers off the roads.
Aside from Europe, Compass said expectations for the year to 30 September remained unchanged, with underlying revenue expected to grow by around 5.5 per cent and operating profit by about eight per cent for the year to the end of September.