Compass cuts back in southern Europe to preserve profit
LONDON (Reuters) - Caterer Compass Group (CPG.L) said it would cut its operations in Southern Europe in the face of worsening trading conditions, helping keep it on track to meet market expectations for this year and next.
Europe has been a weak spot for the group, and the region contrasts with continued growth in North America, where it derives nearly half its revenue, and in fast growing and emerging markets.
Compass, which provides catering and support services to companies, schools and sports venues, said it expected underlying revenue to grow by around 5.5 percent and operating profit to increase by about 8 percent, in line with market expectations, for the year to end-September.
The group, however, said like-for-like volume trends in Europe had worsened in the second half and were running at minus two to three percent.
It said it would reduce its Southern European operations, which accounts for about 4 percent of its total revenue, to about 600 million pounds from 800 million pounds.
It will take a exceptional cash charge of 100 million pounds in 2012 and 50 million pounds in 2013, to generate savings of 50 million pounds in 2013 and 75 million pounds a year by 2014.
Shares in the group, which is providing catering at this weekend's Ryder Cup golf competition in Chicago, have climbed 35 percent in last 12 months, hitting a more than 10-year high of 728 pence in August.
(Reporting by Paul Sandle; editing by James Davey)
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