Struggling contract caterer Compass has been dealt a fresh blow after being forced to downgrade its profits forecast by three per cent.

The admission, in a first-half trading update, saw the company’s share price fall by five per cent and dashed hopes the company had put recent troubles behind it.

Last September, Compass saw its share price tumble by 25 per cent after a similar profit revision which was also accompanied by £200 million hit on costs.

The company said the latest downgrade, equivalent to around £24m, was due to £9m of additional costs in the UK and a £15m reduction in profits from military contracts in the Middle East.

However, it said like-for-like turnover growth predictions had held at six per cent.

Mike Bailey, chief executive, said the UK costs were related to a rationalisation of its office network and a beefing up of its sales, marketing and operational infrastructure.

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