Compass Group PLC (LON:CPG) said its revenues continued to be severely depressed by the effects of the coronavirus pandemic and are expected to remain so for the coming quarter as well.
Organic revenue was down 33.7% in the three months to December 31, 2020, the first quarter of the FTSE 100 catering group’s financial year, compared to a 34.1% decline in the preceding quarter.
Operating profit margins were stronger at 2.7%, up from 0.6% in the preceding quarter.
After its Chartwells school dinners business was accused of profiteering by providing insultingly inadequate school meals packages during lockdown, the FTSE 100 group said it had conducted “a thorough investigation” and “taken several corrective measures that include improved supply chain processes, additional guidance and resources for our employees, and stronger quality assurance checks”.
The company said since the scandal broke last month it has voluntarily also provided breakfasts to all children currently receiving a lunch parcel from Chartwells for the duration of school closures, and will provide both through the February half-term break at its own cost.
Looking forward, Compass said it was encouraged by the news around vaccinations but “the pace of volume recovery remains uncertain”, with varying lockdown measures in place across its key markets.
As a result, second-quarter revenues and volumes will be broadly in line with the first, but operating margins are expected to improve by a further 50-100 basis points.
“Looking further ahead, we remain excited about the significant structural market opportunity globally, a return to organic revenue growth, continued margin improvement and returns to shareholders over time,” the group said, pointing to a pipeline of new business which includes first time outsourcing and market share gains in the more defensive sectors of Healthcare & Seniors, Education and Defence, Offshore & Remote.