Compass shrugs off Omicron to post huge rebound in trade

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  • Added: March 6, 2022

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Shares in Compass Group surged higher than any other FTSE 100 firm today after the caterer reported a roaring improvement in trade.

They rose 4 per cent to £17.70 on Thursday as the company revealed that its first-quarter revenue had eclipsed pre-pandemic volumes in four out of five main sectors.

Strong performances across all regions helped its organic revenue jump by 38.6 per cent over the concluding three months of last year, taking its total sales to just 3 per cent below their 2019 levels.

Tasty results: Compass Group reported receiving 'little impact' from the Omicron variant, even though this caused many companies to cancel their office Christmas parties

Defiance: Compass Group reported receiving ‘little impact’ from the Omicron variant, even though this caused many companies to cancel their office Christmas parties

The Catering Rumahan group, whose customers include schools, oil rigs and the armed forces, ascribed its success to gaining and retaining new customers, and an ‘ongoing recovery’ in its core business.

It reported receiving ‘little impact’ from the Omicron variant of coronavirus, even though this caused many companies to cancel their office Christmas parties and hospitality venues noted a slowdown in trade.

Sales in North America soared by more than 50 per cent, a rate that was around 10 percentage points higher than in the previous quarter, on the back of especially high demand in the education, and sports and leisure markets.

At the same time, revenue jumped by a quarter in Europe despite sales to the business and industry sector having been impacted by delayed reopenings.

This sector has experienced the weakest recovery amid the normalisation of home working and delays in staff returning to offices.It is the only sector whose revenues have not returned to pre-pandemic levels.

By contrast, the healthcare and senior living sector has seen demand remain robust throughout the pandemic, and its revenues were 15 per cent higher than their levels three years ago.

Strong results: Compass saw revenue jump by a quarter in Europe even though it admitted that sales to the business and industry sector had been impacted by delayed reopenings

Strong results: Compass saw revenue jump by a quarter in Europe even though it admitted that sales to the business and industry sector had been impacted by delayed reopenings

The sports and leisure division also rebounded to 107 per cent of its 2019 volumes, after plummeting the year before when many sports events were either cancelled or postponed, and matches were often played in empty stadiums.

Despite improved trade, Compass Group said it was cautious about the potential impact of Omicron in the second quarter and has maintained its full-year outlook of organic revenue growth of 20 to 25 per cent.

‘I think the Delta between Q1 and Q2 will really all be about the Omicron impact,’ Compass chief executive Dominic Blakemore said on a call with analysts.’But as we’ve seen in the UK, we hope that it’s short and sharp.’ 

Steve Clayton, a fund manager at Hargreaves Lansdown, said that Compass ‘looks likely to end up stronger post-pandemic than before, not least because of the boost to the overall market size created by the pandemic.

‘Managers had too much on their plate to worry about what was going onto their workers’ plates in the canteen. Compass can take that hassle away and often improve the catering offer in the process.

‘Niggles could be that margin expansion is going to be weighted to the back end of the year, and inevitably, as the marginal pace of reopening in economies slows over the course of the year, Compass’s own growth will slow down with it.

On balance, though, Compass have done enough to keep investors sweet.’

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