Compass caterer says to overhaul weak southern Europe unit
Compass Group, the world's biggest caterer by sales, said on Thursday that it planned an overhaul of its southern European operations amid economic unrest in Italy, Portugal and Spain.
Although the southern Europe region represents only four percent of the group's overall revenue, Compass said restructuring was necessary "to manage challenging economic conditions" and enable the company to grow.
"Economic conditions in Europe have continued to decline, in particular in southern Europe, and hence we are announcing today a programme of further cost efficiency measures... together with a comprehensive restructuring plan for southern Europe," Compass said in a statement.
Compass said the restructuring would result in annual cost savings of £95 million by 2014 ($154 million, 119 million euros).
However, it will also cost the group £345 million to carry out the overhaul.
Compass, which employs more than 50,000 people worldwide, did not reveal the number of jobs that would be affected by the changes.
"Economic conditions in Europe, and particularly in southern Europe, have worsened throughout the year, as the financial crisis and wider uncertainty continues," the company added in its statement.
It pointed to weakness especially in indebted eurozone nations Italy, Portugal and Spain.
Despite its troubles, Compass said the group had performed well overall in its fourth quarter and was expecting revenue growth, excluding takeovers, of 5.5 percent for the year to September 30 compared with 2010/11. Operating profit was set to rise 8.0 percent.
"Trading in the fourth quarter has been good and, in line with our expectations, organic revenue growth will be around 5.5 percent for the full year," Compass chief executive Richard Cousins said in the statement.
"Overall, the prospects for the business around the world are good and I remain confident that we will continue to drive revenue and margin growth," he added.
© 2012 AFP