Compass Shares Slide as Falling Oil Price Weighs on Business

By Publications Checkout
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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