Catering company Compass has warned of a blow to profits after its Middle East division fed more peacekeepers rather than active military personnel.
The increase in the less risky and lower margin work --trailed in recent months by Compass - will leave a £15 million mark on annual profits.
Compass did not detail the contracts in question but said the "evolving nature" of the business made accurate forecasts difficult.
It is the second time the company has warned on profits after an alert in September caused it to lose around a quarter of its market value.
Shares fell almost six per cent early yesterday as brokers lowered profits expectations for 2005, in one case by £24 million to £620 million.
The downgrade also reflected fresh guidance from the company that it would take a £9 million profits hit in the UK to cover additional spending on front line operations.
As well as contracts with corporate customers, including the BBC, Compass owns the Upper Crust sandwich chain and supplies food to defence and offshore sites, including oil rigs and military personnel.
It manages its central Wales and northern England operations from Birmingham while its accounting centre for the UK and Ireland is based in Rubery.
Key catering contracts in the region include Dudley Zoo, JCB, and British Gas Transco in Solihull.
Chief executive Michael Bailey said: "Some of our military contracts have been replaced by peacekeeping activity, which is at a lower margin.
"Some military contracts are for as little as three months, which makes it difficult to definitively forecast."
He added: "The contracts are very profitable. We would still want to do that business."
A European bank analyst said: "The bears will point to a continuation in the downgrade cycle. However, the positives are important: free cash flow guidance is held, the implication is that capital expenditure will be lower, and the investment in UK operating systems."
Compass said growth in turnover was being driven by a "continuing strong performance in North America ... by new business wins and a high level of contract retention."
Compass said renewed interest in school meals in Britain would not have a big effect on its operations. It has been losing money on some school meals contracts.
Celebrity chef Jamie Oliver has made school meals an unlikely issue in Britain's coming election with a television series in which he tried to provide children with nutritious meals on the government's budget.
That led indirectly to the Government announcing £220 million in new funding for school meals this week.
