Compass targets market share as revenues rebound

Contract catering giant Compass has reported "strong momentum" in new business wins and potential to increase market share having seen a stronger than expected fourth quarter.

It said that full-year revenues for 2020 were expected to be 76% of 2019, marginally higher than originally predicted.

With 10 days of operations to go before its financial year end, the business said that performance in the fourth quarter would be around 86% of that in 2019 with operating margin around 5.5% to 6%. The operating margin for the full year is expected to be 4.4%.

This improvement was led by its contracts in sports and leisure thanks to improved attendance at stadia and strong spend per head. Healthcare and defence, which have remained consistent through the pandemic, are both trading above 2019 levels.

Compass said that the return of education since September had seen high on-campus spending and that trading in business and industry was in line with cautious expectations.

In a pre-close trading update, Compass said: "We continue to be encouraged by the ongoing growth opportunities, including strong momentum in new business wins, from the acceleration in first-time outsourcing, and increased potential for market share gains.

"Looking ahead to the start of the new financial year, most of our sectors are expected to continue performing well; although we remain cautious about business and industry, given continued uncertainty over the pace of office reopening in our major markets.

As previously stated, the group's recovery is unlikely to be linear and will depend on a number of factors, including vaccination and infection rates as well as any further containment measures taken by governments. However, we remain confident in our ability to return to a group underlying margin above 7% before we return to pre-Covid volumes."