Efficiency drive boosts Compass margins

31st Mar 2010 07:02

Catering giant Compass said it has had a good first half, with efficiency measures helping to improve margins in the face of sluggish revenues in many markets.The company, which provides catering for schools, businesses and hospitals, said revenue is expected to be broadly flat compared with the same period the previous year, with efficiency measures helping to improve margins by about 50 basis points.The company said it saw strong growth in new business, high levels of retention and further efficiency savings in North America. The firm expects to see organic revenue growth of around 2% in the first half in North America and an operating margin improvement of around 30 basis points.It is also seeing good levels of new business across most countries in continental Europe, despite challenging economic conditions in some countries. Organic revenue should be about 1-2% lower than last year in the region, though efficiency measures should help lift operating margins by about 30 basis points.In the UK, catering operations for business and industry continue to be impacted by challenging economic conditions, but the catering for hospitals and old people's homes has continued to see growth. As in North America and continental Europe, the company expects margins to improve by about 30 basis points, though organic revenue will be about 6% lower.Compass, which also has operations in countries such as Australia, Japan and Brazil, said it is seeing good levels of new business in the rest of the world.'In the second half, whilst economic conditions are expected to remain challenging, the combination of a strong new business pipeline and a stabilisation in like for like volume should deliver modest organic revenue growth,' the company said. 'The gradual easing of like for like volume pressure and further efficiencies should enable us to make further progress in the margin in the second half of the year compared to the same period last year.'