Foodservice company Compass Group has reported organic revenue for the three months to 31 December 2020 was down 33.7%, in line with expectations given coronavirus restrictions worldwide.
Its Europe business reported organic revenue was down 34.6% for the same period, the first quarter of its financial year, while by sector its sports and leisure business saw organic revenue fall by 76.5% and business industry reported organic revenue of -43.4%. The only sector that saw growth was its healthcare and seniors business, reporting a slight increase of 0.8%.
Despite little volume improvement, the group said operating margin continues to improve, increasing from 0.6% in Q4 to 2.7% in Q1, with all regions now profitable due to contract renegotiations and resizing of the business.
Compass said the pace of volume recovery remains uncertain and it anticipates that second quarter revenues and volumes will be broadly in line with the first quarter, although it expects the second quarter operating margin to improve by 50-100 basis points.
The group said: "We are encouraged by the strong pipeline of new business which includes first time outsourcing and share gains, particularly in the more defensive sectors of healthcare and seniors, education and defence, offshore and remote. We are confident in our ability to rebuild our group underlying margin above 7%, before we return to pre-Covid volumes.
"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 also commented on the events of last month when an image of its free school meals parcel, distributed by its education arm Chartwells, went viral on social media and was branded "disgraceful" by the prime minister.
Compass reiterated that the "quality and quantity of some food parcels fell short of our usual high standards", that it has apologised to everyone who was affected and that the group will be covering lunch and breakfast parcels for schoolchildren through the February half-term break at cost.
The group added: "After conducting a thorough investigation, we have taken several corrective measures that include improved supply chain processes, additional guidance and resources for our employees, and stronger quality assurance checks."