Compass Group yesterday provided a trading update in light of the rapidly changing situation regarding Covid-19.
The world’s largest caterer said organic revenue growth for the five months ending 29 February was 6% as measures to contain the virus in the Asia Pacific region did not materially impact the business.
However, the company said the acceleration of containment measures adopted by governments and clients in continental Europe and North America have affected its expectations for the half year.
The vast majority of its Sports & Leisure and Education business in these regions has been closed, and its Business & Industry volumes are being severely impacted.
Compass said its current expectations are that half year 2020 organic revenue growth should be between 0% and 2%.
It is implementing significant mitigation plans to manage its costs, and at this stage expects the drop-through impact of the lost revenue to be between 25% and 30% across the business.
As a result, its operating profit for half year 2020 will be £125m, some £225m lower than expected.
“We are working to protect our cash flow and are pro-actively managing our capital expenditure and working capital,” the company stated.
It said that it has “significant headroom” against a 4x net debt/ EBITDA covenant in its US Private Placement Agreements and it has substantial liquidity with a £2 billion committed Revolving Credit Facility maturing in 2024.