Compass's cost-cutting effort boosts profits

25 November 2009

25 November 2009 | Allie Anderson

The Compass Group has credited a 36.6 per cent rise in pre-tax profits to cost cutting and better management of spend.

Profits at the catering company stood at £773 million to 30 September after the firm achieved efficiency savings this year of £60 million on the cost of food and £70 million from unit overheads. This included things such as labour costs and how the company recruits agency staff.

A spokesman told SM that because a proportion of the group's work is seasonal, supplying support services and catering for events and in schools, for example, efficient scheduling of labour needs and better management of costs was critical.

A further £31 million savings have been achieved by "streamlining back office procedures and processes", driving costs away from administration and back into operations and business growth. This had not affected the procurement function, the spokesman said.

Richard Cousins, Compass Group's chief executive, said: "Compass has delivered an excellent performance in a challenging environment. Consistently high levels of net new business and a step change in operating efficiency, generating £161 million of savings, have contributed to a further £100 million of profit growth and 60 basis points of margin growth." He added that he expected to see a rise in outsourcing of catering and support services among government departments and agencies as well as the private sector.
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