Compass offsets high food prices

The world's largest caterer supplies schools and the military

Catering firm Compass has reported a 42% jump in profits after it raised prices and improved efficiency to offset the impact of higher food costs.

The world's largest catering firm said pre-tax profit was £442m ($914m) in the year to 30 September, from £312m in the same period a year earlier.

The firm said "cost efficiencies" had offset the higher price of products such as rice, pasta and dairy goods.

Earnings were also helped by selling businesses and steady US revenues.

The company's total six-month revenues were up 5% at £10.3bn, marking a 5% rise on a year earlier.

Compass said its US earnings were largely made from public-sector contracts, which tend to be less volatile and vulnerable to sudden moves in the food markets.

The company has refocused its business by selling non-core assets, such as vending business Selecta, as well as pulling out of underperforming markets.

Morgan Stanley said in a research note that while food inflation remained a key risk, the company "seemed to be managing it well".