Compass Group provides a trading update in light of the rapidly changing situation regarding COVID-19. Our priority remains the health and safety of our employees, clients and consumers.
Compass’ organic revenue growth for the five months ending 29 February 2020 was 6% as measures to contain the virus in our Asia Pacific region did not materially impact our business. Our operating margin during that five month period increased by around 10bps1 with the benefits from the restructuring programme in Europe coming through strongly.
However, the acceleration of containment measures adopted by governments and clients in Continental Europe and North America have affected our expectations for the Half Year. The vast majority of our Sports & Leisure and Education business in these regions has been closed, and our Business & Industry volumes are being severely impacted. Our current expectations are that Half Year 2020 organic revenue growth should be between 0-2%. We are implementing significant mitigation plans to manage our costs, and at this stage expect the drop-through impact of the lost revenue to be between 25%-30% across the business. As a result, our operating profit for Half Year 2020 will be £125 million - £225 million2 lower than expected.
We are working to protect our cash flow and are pro-actively managing our capital expenditure and working capital. We have significant headroom against a 4x net debt/ EBITDA covenant in our US Private Placement Agreements and we have substantial liquidity with a £2 billion committed Revolving Credit Facility3 maturing in 2024. Stable outlooks have recently been reconfirmed on our A/A3 credit ratings.
We continue to monitor the situation closely and will provide a further update with our 2020 Half Year results announcement on 13 May 2020.
Investors Sandra Moura, Simon Bielecki & Agatha Donnelly +44 (0) 1932 573000
Press Tim Danaher & Fiona Micallef-Eynaud, Brunswick +44 (0) 207 404 5959
1 Pre IFRS16
2 Exchange rates at 16 March 2020 9:00am
3 Which contains no financial covenants