Compass results don’t dissuade markets

The price of shares in FTSE 100 food services firm Compass Group (LON:CPG) rose by 2.61% to 1,378.50p (as of 15:15 GMT) despite revenues for the year ended 30th September dropping by 19.8%. Operating profits were down by more than 80% but management said that they were confident in the group’s medium and long term prospects.

CEO Dominic Blakemore commented: “2020 was a challenging year for Compass. I am extremely proud of how the organisation responded to the pandemic. I have been humbled by the commitment of our people in the face of unprecedented adversity and want to thank them for their continued dedication and hard work.

“We began the year on track to deliver our strongest performance ever, and over the course of a fortnight in March, we saw the containment measures to stop the spread of COVID-19 close half of the business. We rapidly enhanced our health and safety protocols, mitigated our costs, increased our liquidity and strengthened our balance sheet. Through the summer, our performance began to improve slowly as we helped clients in Education and Business & Industry return to schools and offices safely.

“Importantly, in the fourth quarter we returned the business to profitability and are now cash neutral. This was achieved mainly through contract renegotiations to reflect the difficult trading environment, continued discipline in terms of costs and some improvement in volumes. We are executing at pace and expect the underlying operating margin in the first quarter of 2021 will be around 2.5%.

“Although the prospects of a vaccine are encouraging, the resumption of lockdowns in some of our major markets shows that we have to continue to take proactive actions to control the controllable and ensure the business can thrive despite the ongoing pandemic. We are innovating and evolving our operating model to be more flexible and to provide our clients and consumers with an exciting offer that is delivered safely and provides great value. This combined with our existing scale, ability to flex costs and focus on operational execution, will allow us to return to a Group underlying margin above 7% before we return to pre-COVID volumes“.