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Compass Shares Slide as Falling Oil Price Weighs on Business

Published on Jul 30 2015 11:55 AM in Restaurant tagged: catering / Compass Group

Compass Shares Slide as Falling Oil Price Weighs on Business

Compass Group shares fell the most in more than a year amid concern that reduced business from oil- and-gas companies will hurt profitability.

The caterer said  it plans to further reduce expenses in the unit serving that industry, and the restructuring will cost of £20 million to £25 million pounds in both 2015 and 2016.

As a supplier of catering services to offshore energy platforms, the falling oil price has led to declining business. Difficulties in this area may reduce profit by £60 million pounds ($94 million) next year, Greg Johnson, an an analyst at Shore Capital, said in a note. The effect will be a 10-basis- point reduction in profit margins this year and next, he said.

The oil-and-gas slowdown is hampering performance in the company’s fastest-growing regions. Organic growth in North America is being constrained, while Compass’s cost savings program only partially offset margin pressure in its Australian business, the company said in a statement Wednesday.

News by Bloomberg, edited by Hospitality Ireland

 

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