Compass Group PLC, the world's biggest caterer, issued its second profit warning in the space of six months after margins on its military catering operations in the Middle East fell.
"Over the last few weeks, we have seen a shift in the volume and mix of our Middle East business as some of our military contracts have been replaced by peacekeeping activity, which is at a lower margin," Compass said in a statement.
"Our current expectation is that profit in the first six months will be approximately 4 mln stg lower than anticipated and approximately 15 mln lower in the full year 2005," it added.
The company went on to reveal that as a result of "rationalising" some of its UK back office functions and investing more into its operational and front line management teams, it will also take a 9 mln stg one-off charge.
House broker ABN Amro is understood to have cut its full-year underlying profit forecast by around 24 mln stg to 620 mln in response to the warning.
Compass, whose clients include London Zoo, the French state railway and organisers of the US Open golf championship, last year saw its profit fall 2.4 pct after it ran up losses on a number of key business contracts.
Like-for-like sales are expected to grow by at least 6 pct in the current year, aided by a continuing strong performance in North America, new business wins and a continued high level of contract retention, the company said.
It added that sales in its home UK market were expected to be in line with expectations, but went on to say the picture in its Continental Europe and Rest of the World Division remained mixed.
"Asia, Australasia, Latin America and Spain continue to perform well, while Northern Europe and in particular France, Germany and the Netherlands remain very challenging," it said.
Compass shares closed Wednesday at 254.25 pence, valuing the business at around 5.5 bln stg.
The stock has lost about 30 pct of its value over the past year, underperforming support services peers by around 33 pct.

Good morning all.

Good Morning all,

It really say's it all when an Insurance company sends you a letter with no contact telephone number on it!!!!!

Good afternoon all, Compass turning tail above, i suppose it is dificult to keep so many balls in the air at once. They have a hand in everything, from school meals to China, so its not suprising that one will fall.