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British caterer Compass expects margins to edge higher

By Reuters

(Reuters) – British catering company Compass Group Plc said on Wednesday its fiscal third-quarter margins would improve sequentially, supported by cost cutting measures, after reporting a slight profit and revenue beat in the first half.

Profit margins in three months to June are expected to inch higher quarter-on-quarter to between 4.5% and 5% after absorbing the impact of reopenings on costs, it said. Its second-quarter margins were ahead of its expectations at 4.2%.

“With the gathering pace of vaccination rollouts across our major markets, we are working closely with our clients to prepare to reopen their sites safely, although the picture across the world remains mixed,” said Chief Executive Officer Dominic Blakemore.

“We expect any revenue recovery to be gradual.”

Work-from-home trends and hybrid modes have slashed the size of Compass’ operations but the British firm has said that it has won new businesses, as many companies start outsourcing their food needs for the first time because of the pandemic.

The company, which serves office workers, school kids, seniors in old age homes and armed forces across 45 countries, said underlying operating profit fell 64.5% to 290 million pounds ($409.74 million) in the six months to March 31. Revenue came in at 8.6 billion pounds, down 30.4% from a year earlier.

Analysts on average estimated operating profit of 281 million pounds on revenues of 8.5 billion pounds, according to a company-compiled consensus.

($1 = 0.7078 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich)