Rising profits on the menu for Compass

COMPASS Group, the world&rsquo;s largest catering group, yesterday posted a 40 per cent jump in first half profit, driven by new high-profile contract wins and the positive impact of currency movements.<br /><br />Group revenue grew 23.9 per cent to &pound;6.9bn over the six months to March, while operating profit soared 40.7 per cent to &pound;453m.<br /><br />Compass said it had made operating and cost efficiency savings of over &pound;50m over the period, improving profit margins. It was also boosted by contract wins with Google in Australia and Electrolux in Sweden, as well as the favourable impact of around &pound;70m in currency movements.<br /><br />The news prompted a flurry of &ldquo;buy&rdquo; recommendations from City brokers.<br /><br />&ldquo;In view of the extremely difficult trading environment, which has clearly affected the business and industry and leisure businesses, this was an extremely resilient and impressive performance. Economic recovery, in due course, can only drive profitability higher,&rdquo; said Ambrian analyst Andrew Darke.<br /><br />Compass said like-for-like revenues had continued to weaken in parts of the business and industry and sports and leisure sectors as a result of clients reducing discretionary spending on event catering and corporate hospitality. But it added this decrease was offset by strong revenue growth in the education, healthcare and defence and offshore and remote site sectors.<br /><br />Chief executive Richard Cousins sounded a positive note for the company&rsquo;s full-year prospects.<br /><br />&ldquo;Looking forward, the trends in revenue seen in the first half of the year are expected to continue into the second half,&rdquo; he said. &ldquo;The acceleration in the rate of cost efficiencies should enable us to deliver further progress in the second half of the year.&rdquo;<br /><br />Compass increased its interim dividend by 10 per cent to 4.4p.<br /><br />The group&rsquo;s shares rose 6.09 per cent to 353p by market close yesterday.