# Compass Group Business & Industry volumes severely impacted by COVID-19

- Link: https://www.directorstalkinterviews.com/compass-group-business-industry-volumes-severely-impacted-by-covid-19/412808994
- Published: 2020-03-17T07:22:06+00:00
- Author: Amilia Stone

**[Compass Group PLC](https://www.directorstalkinterviews.com/ftse-company/compass-group-plc/cpg.l)**(
LON:CPG) today provided 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 10bps^(1) 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 million^(2) 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 Facility^(3) 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.

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