There is light at the end of the tunnel for the world’s largest caterer Compass Group after its chief executive revealed the business returned to profitability latest quarter and is now cash neutral.
Compass has seen £4.6 billion (£3.4 billion) wiped off its turnover compared with 2019, while operating profit is a third of what it was the year before.
But Dominic Blakemore said the business was now back in the black for the three months to the end of September.
“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%.”
Mr Blakemore also described how dramatically the business was hit when the first national lockdown was introduced earlier this year.
“We began the year on track to deliver our strongest performance ever, and over the course of a fortnight in March, we saw the containment measures to stop the spread of Covid-19 close half of the business.
“We rapidly enhanced our health and safety protocols, mitigated our costs, increased our liquidity and strengthened our balance sheet. Through the summer, our performance began to improve slowly as we helped clients in education and business and industry return to schools and offices safely.”
Mr Blakemore said that although the prospects of a vaccine were encouraging, the resumption of lockdowns in some of its major markets meant it would need to take “proactive actions” to ensure the business thrives.
“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.”
Mr Blakemore described the scope for growth from first time outsourcing and share gains as “significant”.
Additionally, he said the firm has a strong pipeline of new business in healthcare and seniors, education and defence, offshore and remote.