Catering Firm Compass Forecasts 19% Organic Sales Fall And £100m Hit
Catering firm Compass Group has said that it cannot predict how quickly its revenue will recover from the coronavirus pandemic as it forecast a 19% organic sales fall and a £100 million hit on its biggest businesses.
Shares in Compass, the cafeterias and catering operations of which serve workers at Google, Shell and HSBC as well as schools, old age homes and the armed forces, have slumped 40% this year and were down 4.5% after the FTSE 100 firm reported a 36% preliminary fall in fourth-quarter revenue.
"The pace at which our revenues and margins will recover remains unclear, especially given the possible increase in lockdown measures in the Northern Hemisphere through the winter months," Compass said in a statement.
Compass said that the costs of adjusting to the impact of the coronavirus pandemic, which included layoffs, furloughing staff and reduced working hours, hit £90 million in the fourth-quarter, up from £42 million in the third.
The company's chief executive, Dominic Blakemore, told Reuters in May that Compass may end up being a slightly smaller business as longer periods of physical distancing threatened to reduce the number of customers that it serves.
Compass, which made nearly 90% of its first-half revenue in North America and Europe, said that at the peak of coronavirus lockdowns in May, more than half of its operations were closed.
However, it said that its organic revenue was down 36% year-on-year in the fourth quarter, compared to 44% in the third, signalling an improvement as businesses and schools start reopening.
Analysts on average expect operating profit at Compass for the year ending September 30 to fall by nearly 70% to £597 million, Refinitiv Eikon data shows. Compass reported operating profit of £1.89 billion for 2019.