Roadside fare beefs up Compass

CATERING group Compass bucked the trend of declining sales at motorway service stations, posting a 6% rise in like-for-like sales in its roadside division in the first half of the year.

Motorway catering, never a highlight of the culinary world, has taken a drubbing recently as declining numbers of travellers spend less and less money during breaks in their journeys. Last week credit agencies downgraded their bond rating for Compass rival Roadchef.

Compass chief executive Mike Bailey said the improved performance at the group's Little Chef and service station areas had very little to do with pricing. 'We've focused on upgrading the premises,' he said. 'We've introduced about 200 different branded outlets into the stations, such as Upper Crust and Cafe Ritazza. This means we can sell food to people who visit the stations but only to buy petrol or to go to the loo.'

Growth in the roadside business matched the rest of the UK while worldwide the group managed a 7% rise in like-for-like sales in the six months ended 31 March. Total turnover for the group, the largest food services company in the world, was up 23% at £5.01bn. Goodwill write-offs of £117m and a further £15m of exceptional costs resulted in pre-tax profits of £126m compared with £79m at the same point last year.

Setting aside the exceptional items, the results showed pre-tax profits up 10% on last year at £258m. Analysts had been looking for between £250m and £256m. A dividend of 2.1p, up 11% was declared.

Bailey announced a more settled period after the frantic spending spree the group embarked on following its separation from Granada. 'We expect a reduction in acquisition activity going forward,' he said. 'Since we divested the Forte business we've spent a couple of billion. We've now got an enormous footprint in over 90 countries. We're going to concentrate on driving growth out of these countries. We've got 30,000 restaurants in 96 countries and our sales force is continually trying to leverage that business and sell other services to those clients.'

Compass raised more than £1bn of new money this month in three separate tranches of $750m, e600m and £200m, but this was described by Bailey as housekeeping. 'We're replacing a number of loans that were maturing with new finance,' he said. 'We're not increasing our level of debt.'