Vending

Compass Group revenue decline continues for Q1 2021

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February 4, 2021

Compass Group Plc., which owns Compass Group USA and Canteen Vending Services in the U.S., reported that Q1 2021 organic revenue was down by 33.7%, which was in line with expectations given the lockdown measures, according to a trading update ahead of its annual general meeting.

The organic revenue decline for Q1 2021 marked improvement over the prior two quarters, which were down 44.3% and 34.1% in Q3 2020 and Q4 2020, respectively. The report did not include revenue numbers.

On a regional basis, North America suffered the most for Q1 2021, down 36.7%, followed by Europe, down 34.6% and the rest of the world down 12.3%.

On a business segment basis, sports and leisure was down the most at 76.5%, followed by the business and industry sector, down 43.4%, followed by education, down 37%, while healthcare and seniors was up 0.8%.

The company's retention remained strong at 95.7%.

Despite little volume improvement, the group's operating margin continued to improve, increasing from 0.6% in Q4 2020 to 2.7% in Q1 2021, with all regions now profitable. The company credited this to adapting operations and to managing its cost base more flexibly, including contract renegotiations and resizing of the business.

Since Jan.25, the company's Chartwells division has been providing breakfasts to all children currently receiving a lunch parcel for the duration of school closures. The company will continue to provide lunch and breakfast parcels through the February half term break. The costs of these initiatives will be covered by Compass.

The company enters the second quarter with varying lockdown measures in place and anticipates that Q2 revenues and volumes will be broadly in line with Q1. The company is confident in its ability to rebuild underlying margin above 7%, before the return to pre-COVID volumes.

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