I seem to be getting rather obsessed with strong market reactions to bad news, following my recent piece on Skyepharma with this. This time its Compass. Yesterday the price fell 5% on the back of a fairly minor profit warning.

Compass announced £24m in lower profits and extra costs, 3.7% of forecast EBIT, and with no change to cashflow expectations. Furthermore the latter suggests that the apparent one-off problems in the second half of last year are genuinely one-off , providing some reassurance.

So the market is marking Compass down for more than the actual problems in the statement, clearly there is a loss of confidence given Compass has had a lot of bad newsflow recently. In addition the statement has drawn attention to the fact that the sales mix in the Middle Eastern business is almost certain to deteriorate. On the other hand the much larger UK, US and continental European businesses all appear to be performing as expected.