Profit slide pushes Compass lower

Compass has served up some cost cutting measures

Shares in Compass, the world's biggest caterer, fell sharply after the firm revealed a drop in first half profits.

Chief executive Michael Bailey said he was "disappointed" with the group's performance, as it said pre-tax profits had fallen 14.5% to £124m.

He added that the firm's business model was not broken but needed "care and attention" to improve earnings.

Last month Compass had warned profits would be lower than the £145m recorded in the six months to March 2004.

The group - which provides food at schools and owns the Harry Ramsden, Upper Crust and Caffe Ritazza brands - added that sales were up 6% on a like-for-like basis, on turnover of £6.2bn.

'Not happy'

Shares in the firm ended trading down 5.6% at 222.75 pence.

"I am not happy with our recent performance. We need to respond more rapidly than we have to the changes taking place in our market," Mr Bailey said.

In an effort to boost value and cut costs the company is rolling out a restructuring drive that will lead to savings of £50m over the coming 18 months.

As part of the plans it will shake-up its buying arm in an effort to reduce food costs as well as improve productivity.

Looking ahead, the group said it expected turnover and margins to "continue the trends seen in the first half".

A slight pick-up in business in Europe and the rest of the world, as well as a continued good performance in North America would help keep the company on track for the full year, Mr Bailey added.