4th Feb 2021 08:50
(Alliance News) -Â Compass Group PLC on Thursday reported a more moderate decline in organic revenue for its first quarter and improved margins, the contract caterer having been hit hard by the virus pandemic and associated restrictions on travel and entertainment.
Shares in Compass were up 3.7% at 1,399.50 pence in London on Thursday, making the stock one of the best performers in the FTSE 100.
Organic revenue tumbled 34% year-on-year in the three months to December 31, which is the first quarter of Compass's 2021 financial year.
This marked an improvement on a 34% slide in the fourth quarter of its 2020 financial year and a 44% tumble in the third quarter. Compass's financial year runs to September 30.
"This performance was in line with our expectations, given the protracted lockdown measures to contain the virus during the winter months. Our retention remained strong at 95.7%," the contract caterer said.
Its operating margin continued to improve, increasing to 2.7% in the three months to December 31 from 0.6% in the fourth quarter of the 2020 financial year and minus 4.8% in the third. All regions are now profitable, Compass noted.
Looking ahead, Compass commented: "Although the news around vaccinations is encouraging, the pace of volume recovery remains uncertain. As we enter the second quarter with varying lockdown measures in place across our key markets, we anticipate that Q2 revenues and volumes will be broadly in line with Q1."
Nonetheless, its second quarter operating margin is expected to improve by a further 50 to 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," said Compass.
By Lucy Heming;Â [email protected]
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