TIDMCPG
RNS Number : 3967T
Compass Group PLC
25 March 2021
Legal Entity Identifier (LEI): No. 2138008M6MH9OZ6U2T68
25 March 2021
Pre-Close Trading Update
This statement updates investors on the Group's performance
since 4 February 2021,
ahead of the Half Year results announcement on 12 May 2021 for
the six months ending
31 March 2021.
Continued good margin improvement whilst volumes remain
subdued
By region Organic revenue[1] Operating margin[2]
Q1 2021 Q2 2021 HY 2021 Q1 2021 Q2 2021 HY 2021
-------- -------- -------- --------
North America (36.7)% c. (30)% c. (34)% 4.0% c. 5.4% c. 4.6%
-------- --------- --------- -------- -------- --------
Europe (34.6)% c. (30)% c. (33)% 1.2% c. 1.7% c. 1.4%
-------- --------- --------- -------- -------- --------
Rest of
World (12.3)% c. (10)% c. (11)% 4.0% c. 5.3% c. 4.6%
-------- --------- --------- -------- -------- --------
Group (33.7)% c. (28)% c. (31)% 2.7% c. 4.0% c. 3.4%
-------- --------- --------- -------- -------- --------
By sector Organic revenue 1
Q3 2020 Q4 2020 Q1 2021 Q2 2021 HY 2021
-------- -------- -------- --------- ---------
Business & Industry (50.7)% (44.1)% (43.4)% c. (41)% c. (42)%
-------- -------- -------- --------- ---------
Education (60.2)% (35.1)% (37.0)% c. (29)% c. (33)%
-------- -------- -------- --------- ---------
Healthcare & Seniors (5.1)% 0.2% 0.8% c. 1% c. 1%
-------- -------- -------- --------- ---------
Sports & Leisure (89.9)% (78.9)% (76.5)% c. (69)% c. (73)%
-------- -------- -------- --------- ---------
DOR (8.8)% (7.6)% (1.2)% flat c. (1)%
-------- -------- -------- --------- ---------
Group (44.3)% (34.1)% (33.7)% c. (28)% c. (31)%
-------- -------- -------- --------- ---------
% of 2019 revenues[3] 56.4% 66.5% 71.1% c. 71% c. 71%
-------- -------- -------- --------- ---------
The Group's organic revenue for the three months to 31 March
2021 is expected to be
c. (28)% as we begin to lap the COVID-19 impact on our last
year's revenues. Organic revenues for the six months are expected
to be c. (31)%. In both Q2 and HY 2021, we have been operating at
c. 71% of our 2019 revenues.
The Group's operating margin is expected to increase by around
130bps from 2.7% in Q1 to c. 4.0% in Q2, resulting in a half year
margin of c. 3.4%, despite similar volumes quarter on quarter.
Currency
Trading results from our overseas operations are translated at
the average exchange rates for the period. If current spot rates[4]
continue to 31 March 2021 foreign exchange translation would
negatively impact the 2020 half year revenue by GBP456 million and
operating profit by GBP38 million.
If current spot rates were to continue for the remainder of the
year, foreign exchange translation would negatively impact 2020
revenue by GBP930 million and operating profit by GBP36
million.
Summary
While the vaccination efforts around the globe are advancing,
the pace of volume recovery remains uncertain. Encouragingly, the
pipeline of new business and client retention continue to be
strong.
We are controlling the controllable by managing our costs,
adapting our operations and resizing our business. We remain
confident in our ability to rebuild our Group underlying margin
above 7%, before we return to pre-COVID volumes.
Looking further ahead, we are excited about the significant
structural market opportunity globally, organic revenue growth,
continued margin improvement and returns to shareholders over
time.
We will provide a further update on trading and performance at
our Half Year results on 12 May 2021.
****
Enquiries
Investors Agatha Donnelly & Helen Javanshiri +44 (0) 1932 573000
Tim Danaher & Fiona Micallef-Eynaud, +44 (0)20 7404
Press Brunswick 5959
Website www.compass-group.com
Note to Editors
a) Compass Group PLC is the world's leading food service
company, which generated annual revenues of GBP20.2 billion in the
year to 30 September 2020. It operates in around 45 countries,
employs and engages around 550,000 people and serves over 5.5
billion meals a year. The Company specialises in providing food and
a range of support services across the core sectors of Business
& Industry, Healthcare & Seniors, Education, Sports &
Leisure and Defence, Offshore & Remote, with an established
brand portfolio.
b) Organic revenue, a term used throughout the announcement, is
calculated by adjusting for acquisitions (excluding current period
acquisitions and including a full period in respect of prior period
acquisitions), sale and closure of businesses (excluded from both
periods) and exchange rate movements (translating the prior period
at current period exchange rates).
c) Forward looking statements
Certain information included in this announcement is
forward-looking and involves risks, assumptions and uncertainties
that could cause actual results to differ materially from those
expressed or implied by forward-looking statements. Forward-looking
statements cover all matters which are not historical facts and
include, without limitation, projections relating to results of
operations and financial conditions and the Company's plans and
objectives for future operations, including, without limitation,
discussions of expected future revenues, financing plans, expected
expenditures and divestments, risks associated with changes in
economic conditions, the strength of the foodservice and support
services markets in the jurisdictions in which the Group operates,
fluctuations in food and other product costs and prices and changes
in exchange and interest rates. Forward-looking statements can be
identified by the use of forward-looking terminology, including
terms such as "believes", "estimates", "anticipates", "expects",
"forecasts", "intends", "plans", "projects", "goal", "target",
"aim", "may", "will", "would", "could" or "should" or, in each
case, their negative or other variations or comparable terminology.
Forward-looking statements are not guarantees of future
performance. All forward-looking statements in this announcement
are based upon information known to the Company on the date of this
announcement. Accordingly, no assurance can be given that any
particular expectation will be met and readers are cautioned not to
place undue reliance on forward-looking statements, which speak
only at their respective dates. Additionally, forward-looking
statements regarding past trends or activities should not be taken
as a representation that such trends or activities will continue in
the future. Other than in accordance with its legal or regulatory
obligations (including under the UK Listing Rules and the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority), the Company undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of new
information, future events or otherwise. Nothing in this
announcement shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
d) A copy of this release, together with all other recent
announcements and presentations can be found on Compass Group's
website at www.compass-group.com .
e) For definitions please refer to the glossary of terms in the 2020 Annual Report and Accounts.
These results are unaudited.
[1] Year on year change.
([2]) Underlying operating margin pre resizing costs. Resizing
costs of GBP20m in Q1, c. GBP55m in Q2, predominantly in
Europe.
[3] On a constant currency basis.
[4] Closing rates as at 19 March 2021.
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END
TSTUSSNRARUOUAR
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