Market report: Leaner canteens point Compass south

Compass supplies food for schools Credit: © foodfolio / Alamy

Shares in catering giant Compass Group pointed firmly south on Tuesday, after the group announced plans to cut down its workforce as companies slim down their canteens.

The drop comes after the group, which provides meals in more than 50 countries, said its full-year underlying profit had risen but warned on the impact of a restructuring charge prompted by a weaker outlook within its European operations.

Compass said it would take a £160m hit over 2019 and 2020, and a non-cash charge of £140m, as it repositions itself “against the backdrop of a deteriorating macro environment in Europe”. The company said its performance across the rest of the world remained encouraging.

It is to cut around 3,000 roles as part of a programme to make £300m of savings over the next two years.

The number of job cuts in Britain would be in the “low hundreds”, he added, some of which will be achieved by not filling new positions.

Hargreaves Lansdown’s Nicholas Hyett called it an “unusually eventful set of numbers” for the group, adding: “the cost of getting Compass into better shape to weather any coming storm is unexpectedly high”.

Compass closed down 155.5p, or 7.5pc, at £19.16.

On the FTSE 250, which hit a 15-month high as spirits remained upbeat for another session, fellow foodie firm Greencore was also feeling the pain.

The Irish company, one of the world’s biggest sandwich manufacturers, made a pre-tax profit of £56.4m in the year to the end of September, compared with £17.8m the year before.

It said a “strategic reset” of its operations had been completed following its withdrawal from the US.

Chief executive Patrick Coveney said: “Over the past 12 months we have fundamentally reset our business.”

Jefferies analysts noted that a slow finish to the year had knocked the figures slightly, saying they expected a lowered consensus outlook on the company. Greencore closed down 8.4p at 239.4p.

The only bigger faller on the FTSE 250 was real estate firm Shaftesbury, which has been forced to write down the value of its portfolio amid a downturn on the high street.

The company booked a 0.2pc fall in the value of its estate, which includes some of London’s most sought-after shopping districts, comprising 15 acres across areas such as Covent Garden and Soho. It closed down 43p at 908p.

Overall, the midcap index closed up 0.8pc, or 161.8 points at 20,864.9, while the blue chip FTSE 100 edged up 6.8 points, or 0.1pc, to end at 7,403.1.

The biggest climber across London’s main market was Pets at Home, which bounded up 34.6p, or 16.1pc, at 249p after a “strong” first half put it in line to top its previous guidance.