Vending

Compass Group 2020 sales, earnings tumble due to COVID-19

Logo provided.

November 24, 2020

Compass Group PLC, which owns Canteen in the U.S., reported revenue fell 18.8% year on year from £24.8 billion ($33.06 billion) to £20.2 billion ($26.93 billion) for the year ended Sept. 30, 2020 as COVID-19 related restrictions reduced volumes in business and industry, education, sports and leisure, according to an earnings release.

Operating profit fell 69.7% from £1.852 billion ($2.47 billion) to £561 million ($747.8 million) while earnings per share fell 77.8% from 83.8 pence ($1.12) to 18.6 pence (25 cents).

Shares traded today at $18.30 against a 52-week range of $10.69-$26.51.

Underlying operating margin was 2.9% or 3.5% (excluding contract related non-current asset impairment and onerous contract charges) with a return to profitability in Q4, according to the release.

The company expects Q1 2021 margin to be around 2.5%.

"Importantly, in the fourth quarter we returned the business to profitability and are now cash neutral," Dominic Blakemore, group chief executive, said in a prepared statement. "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," he said. "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."

For an update on how the coronavirus pandemic is affecting convenience services, click here.