- Oops!Something went wrong.Please try again later.
Sales at the world’s largest catering company, Compass Group, fell by nearly third in the first half of the financial year, it has revealed.
The business said revenues are expected to have contracted by 31% in the six months ending March 31, with its sports arm worst hit.
Compared with a 33.7% fall in revenue in the last quarter of 2020, the first three months of this year have been better, with a 28% drop between January and March.
Despite these hits, the company’s operating margin rose 3.4%.
“The recurring theme from the last nine months – weaker revenue trajectory but a better than expected earnings before interest, tax and amortisation (Ebita) margin – is repeated again today,” said analysts at Jefferies, adding that market expectations for the company are likely to remain unchanged.
“We still believe Compass is the best-in-class industry operator but the share price assumes rapid recovery, and consensus margin recovery assumptions look optimistic,” they added.
The company’s sports and leisure business, which runs the catering at Chelsea Football Club, took the biggest hit, suffering a 73% revenue drop in the first half.
Its education business, including school and university canteen operator Chartwells, saw a 33% hit, while the business and industry segment dropped 42%.
Only Compass’s healthcare and seniors unit, which works with 150 care homes in the UK, saw positive movement, with revenue increasing 1% across the six months.
“We are controlling the controllable by managing our costs, adapting our operations and resizing our business. We remain confident in our ability to rebuild our group underlying margin above 7%, before we return to pre-Covid volumes,” Compass said.
“While the vaccination efforts around the globe are advancing, the pace of volume recovery remains uncertain. Encouragingly, the pipeline of new business and client retention continues to be strong.”