Shares in Compass Group were down on the FTSE 100 in morning trading after the company issued a trading statement ahead of its full year results, due out on 24 November.

The catering group said that trading momentum in the first nine months had continued in the fourth quarter, which ends today. In the first half of the year Compass saw organic revenue growth of 0.4 per cent, a figure expected to rise to 5.0 per cent in the second half.

In the full year organic revenue growth is expected to be around three per cent. The group said that revenue growth was due to a rise in new business and an improved rate of retention.

Like for like volumes in the group's Business & Industry and Sports & Leisure divisions were described as "challenging" but have remained "broadly level" with the second half of last year.

In North America Compass said it expected to see organic revenue growth of 5.5 per cent, in Europe organic revenues are expected to be flat, in Britain and Ireland organic revenue is expected to drop four per cent while in the Rest of the World revenue growth is expected to be around six per cent.

In an outlook statement Compass said, "Over the past twelve months we have focused on positioning the Group for growth. It is therefore pleasing to see the progress that has been made in organic revenue growth over the year. Whilst too early to call a trend, it is particularly encouraging to see an increase in new business and an improvement in retention in the second half of the year. Our continuing ability to deliver operating efficiencies is enabling us to re-invest in growth, whilst at the same time drive margin improvement.

"Looking forward, the ongoing challenging economic conditions are likely to continue to impact like for like revenues in the near term. However, we are well placed to exploit the significant structural growth opportunity in both food and support services around the world and we are encouraged by the pipeline of new business. In an environment where cost efficiency remains high on the agenda, we believe the benefits of outsourcing are clear. Furthermore, the ongoing focus on operating efficiency should enable us to continue to re-invest in growth whilst delivering further margin progression. In addition, the strength of the cash flow and balance sheet is enabling us to reward shareholders and to accelerate growth through value creating infill acquisitions."

Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers, commented, "Expectations may have finally run ahead of Compass, with a solid update being greeted by profit taking. Nonetheless, management's ability to remove costs, with savings being reinvested in growth opportunities, underlies a progressive performance. Furthermore, growth in emerging markets is also proving an important driver.

"On the downside, like the corporate world in general, management continues to highlight still challenging economic conditions, whilst rising food costs will need to be monitored for their potential impact on profit margins.

"In all, Compass continues to offer an enticing combination of defensive growth attributes, underwritten by private and public body initiatives to drive down costs, with consensus opinion remaining highly favourable in tone."

By 10:00 shares in Compass Group were down 3.08 per cent on the FTSE 100 to 534.50 pence per share.