Catering giant Compass reports full year operating profits down nearly 70%

Naomi Ackerman
·2 min read
 (Compass Group)
(Compass Group)

Compass, the world's largest catering company, has posted a nearly 70% drop in operating profits for the full year to September 30.

The FTSE 100 firm, which supplies meals at offices, stadiums, hospitals and schools, said on Tuesday that it saw operating profit plunge from £1.85 billion to £561 million in the period, as lockdowns worldwide saw demand tank.

Revenues were down 18.8% to £20.2 billion.

But the catering giant, which serves 5.5 billion meals a year across 45 countries, returned to profit in the fourth quarter after implementing cost-savings, pivoting to delivery, making technology platform acquisitions, and re-negotiating contracts with clients.

The company completed a £2 billion cash raise in June to help it see out the pandemic using London Stock Exchange Group-backed fintech platform Primary Bid, in a major opportunity for small investors.

Chief executive Dominic Blakemore said that he is confident the company can restore operating margins to above 7% “and get back to industry-leading performance, and that is before we fully restore the volumes we enjoyed pre-Covid”.

Compass caters at Chelsea and Spurs, and the boss said he is "delighted the Government is dipping a toe in the water in terms of external and internal sporting events" after December 2.

Blakemore said: "Our financial performance has obviously been seriously affected by Covid.

"After March more than half of our business closed, with sports and leisure, business and industry and education all particularly hard-hit.

"We moved really quickly to respond... And since the summer our performance has improved.

“We are very excited about a vaccine, as you can imagine, it has given everyone a lift. But we can't base our planning on that and our focus continues to be on controlling what we can control.”

The company said it has seen innovation normally expected within three to four years in just months.

Blakemore said: "In terms of growth and prospects for the business, we are seeing really good new business wins particularly in North America.

"We've accelerated our focus on kiosk and apps that have focused on pre-order and click and collect in particular.

"We believe that our scale and focus on operational execution leave us really well-placed for future growth, and really emerging from this pandemic stronger than we have ever been."

Analysts at Barclays said: "Compass can return to its ‘compounder status’ along with margins back to around 7% in a couple of years, and the group remains one of our preferred picks in the sector on a 12-month view as we expect confidence in that outlook to rebuild."

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