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Compass Group heads south as it serves up fall in half-year profits

The world’s largest catering group blamed foreign exchange headwinds for a 4.7% fall in pre-tax profits as it kept its full-year forecasts unchanged
catering
Compass serves an estimated 5bn meals every year

Shares in Compass Group PLC (LON:CPG) headed south at the opening bell after the catering giant served up a fall in first-half pre-tax profits.

Foreign exchange headwinds meant revenues fell 0.8% to £11.38bn in the six months ended March 31 (H1 17: £11.47bn).

Currency headwinds

Compass, which provides meals for office workers, armed forces and schoolchildren around the globe, reported a 10 basis points fall in the operating margin to 7.5%.

Pre-tax profit fell in the six months by 4.7% to £792mln, with “negative foreign currency translation” being blamed once again.

North America – which accounts for more than half of the group’s sales –  was a bright spot though, with organic revenue in the US and Canada rising 7.3% compared to the first half of 2017.

Full-year forecasts unchanged

“North America continues to make excellent progress with broad-based growth across sectors,” said new chief executive Dominic Blakemore, whose appointment was brought forward after long-time boss Richard Cousins died in a plane crash.

He added: “Performance in Europe was mixed, with good growth in the UK, offset by subdued trading in Continental Europe. Notably, the performance in our Rest of World region is improving.”

Despite the drop-off in profits, the world’s largest catering firm hiked its interim dividend by 10% to 12.3p (H1 17: 11.2p) and reaffirmed its full-year forecasts.

Compass shares were down 5.8% to £14.92 early on Wednesday.

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Compass Group Timeline

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