Catering Giant Compass Expecting Margins To Improve, As Profits Rise

By Steve Wynne-Jones
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Catering Giant Compass Expecting Margins To Improve, As Profits Rise

Contract catering firm Compass Group Plc said that it expects fiscal third-quarter margins to improve sequentially, as the business reported a slight profit and revenue beat in the first half.

Profit margins in three months to June are expected to inch higher quarter-on-quarter to between 4.5% and 5% after absorbing the impact of reopenings on costs, the company said.

Its second-quarter margins were ahead of its expectations at 4.2%.

Reopening Sites

"With the gathering pace of vaccination rollouts across our major markets, we are working closely with our clients to prepare to reopen their sites safely, although the picture across the world remains mixed," chief executive Dominic Blakemore said. "We expect any revenue recovery to be gradual."

Work-from-home trends and hybrid modes have slashed the size of Compass' operations but the British firm has said that it has won new businesses, as many companies start outsourcing their food needs for the first time because of the pandemic.


The company, which serves office workers, school kids, seniors in old age homes and armed forces across 45 countries, said underlying operating profit fell 64.5% to £290 million in the six months to March 31. Revenue came in at £8.6 billion, down 30.4% from a year earlier.

Analysts on average estimated operating profit of £281 million on revenues of £8.5 billion, according to a company-compiled consensus.

Second quarter operating margin of 4.2%, was 20bps ahead of the group's pre close trading update and an increase of 150bps from the first quarter, the business said. It noted that it restored more than half of its pre-COVID margin during the quarter.

News by Reuters, edited by ESM. For more A-Brands stores, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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