EU slowdown wipes £2.5bn off Compass
AROUND £2.5bn was wiped off Compass Group’s value yesterday after it warned it will cut jobs amid tougher trading in europe.
The catering group said there was less demand for its staff in office canteens because businesses in europe have been reducing their workforces.
Compass, which is the world’s biggest catering firm, serves 5.5bn meals a year for schools, army barracks and employers such as Google, hSBC, Boeing and Coca-Cola. It brings in around 40pc of its revenue from catering for businesses.
Compass has set aside £300m for writedowns in 2019 and 2020. Around half of this will fund a restructuring, which will include a redundancy plan for up to 0.5pc of its 600,000 employees worldwide – equal to around 3,000 roles.
The other half will be put towards loss-making contracts, Compass said in its annual results.
Several hundred of these job cuts are expected to be in the UK, while others could go in France, Germany, Japan and Brazil.
Compass chief executive Dominic Blakemore said there had been ‘pressure’ in the part of the business that serves businesses and industry in europe, and that there had been ‘some hesitation’ from customers making decisions on contracts.
The firm was the biggest faller on the FTSe 100, sinking 7.5pc, or 155.5p, to 1915.5p, wiping £2.5bn off its market value. Group sales rose 6.4pc to £25.2bn – its highest rate of growth in ten years.
And the company’s sports division excelled, clinching a contract extension with Chelsea Football Club and catering the Wimbledon tennis championship.
Full-year profit before tax fell 3.5pc to £1.5bn.
Blakemore was upbeat about the firm’s outlook for 2020, but said it ‘remains cautious’ about future trading in europe.