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| Francis Mackay |
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Northern Europe has continued to give the Compass Group a hard time in the four months since October 2004.
Speaking at the contract caterer’s annual general meeting today, chairman Francis Mackay said that markets in France, Germany and the Netherlands had remained “very challenging” over this period.
He added that growth was still strong in North America, however, while the Middle East, Asia, Australia and Latin America were performing well.
The UK – where profits had been hit last year by the demise of a key distributor, start-up costs at in-store restaurants, and lower-than-expected margins from local authority education contracts – has developed in line with expectations.
Compass warned last September that its profits would be £30m below market expectations. In January it saw its share price drop to 247.5p from 385p a year before on the back of poor 2004 results.
The group, which unveils its interim results on 18 May, is now forecasting like-for-like growth in sales turnover of at least 6%. It is concentrating on improving free cash-flow (expected to be between £350m and £370m) and improving return on capital.
Mackay said current trends were similar to those seen in the second half of 2004, with new wins driven by the healthcare and education sectors. Growth in the defence, offshore and remote sites division, however, was slowing down.
Key contracts gained over the past four months include:
- A three-year contract won by Seiyo Food Systems with Japan Post, with annual turnover of £18.3m
- 10- and five-year contracts with University Place, Indiana, and Norfolk State University in the USA (£8.6m and £3m respectively)
- Two five-year contracts won by Medirest in the UK with West Herfordshre Hospitals NHS Trust and Homerton University Hospital NHS Foundation Trust (£8.6m and £4m respectively)
- The renewal of ESS Offshore’s contract with Statoil in the North Sea for five years (£11.7m)
by Angela Frewin
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