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