Compass heads in the right direction thanks to Cousins

Marc Sidwell
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CHIEF executives take a lot of criticism, but some firms demonstrate what a difference the right boss can make. Six years ago, Richard Cousins stepped into the top role at Compass, following a series of profit warnings by the global contract catering firm. Compass’ latest results are more solid than stellar, but Cousins’ presence still gives good reason to trust Compass’ direction of travel.

Before taking on the caterer, Cousins had led BPB into the FTSE 100, quadrupling its market cap and then negotiated a significantly-improved bid from Saint-Gobain during its hostile takeover. At Compass, he showed the same ambition and willingness to make tough decisions, pulling out of some 50 countries within the first year and a half and disposing of £3bn in tangential business ventures to restore health to the corporate balance sheet.

Cousins’ retrenchment paid off. Today Compass is growing and well-positioned to benefit from global opportunities, with nine per cent growth in new business over the year and a positive like-for-like trend in fast-growing and emerging markets, which now account for 18.6 per cent of group revenues.

That’s not to say market conditions are easy, especially in Europe, where declining like-for-like volumes have forced cost saving measures. The £400m share buyback announced yesterday wasn’t as big as some had hoped, and a spot of profit taking followed.

But a company that specialises in saving organisations money by outsourcing catering and other services looks well-placed in a world where governments – and corporates – everywhere are looking to the bottom line. Cousins earned £2.3m in 2011 including all benefits and bonuses. The company increased its revenues by £1.25bn between 2011 and 2012. A good boss is worth the money.

Sometimes a sector delivers a perfect storm. Johnson Matthey, the world’s largest manufacturer of catalytic converters, had gloomy half-year numbers yesterday, with profit before tax down six per cent, and warned of more of the same to come. The main culprit is low platinum prices, a key ingredient in catalytic converters.

Even unrest at South African mines wasn’t enough to drive platinum to old highs. Johnson Matthey’s precious metals division’s underlying operating profit fell by a third and revenue by 22 per cent.

Low prices in the precious metal are compounded by declining demand for new cars in the troubled Eurozone. The most important category of catalyst for Johnson Matthey is light vehicles, accounting for two thirds of sales. Europe is the most important single market for these catalysts: 57 per cent of sales in the first half of 2012. As a result, a nine per cent fall in European sales year on year cost the firm £25m where an 18 per cent boost in US sales only added £15m. Even the strongest chief executive would struggle to mine good news out of these grim realities.