Compass Group PLC (LON:CPG) said it is “excited about the significant structural market opportunity globally” – likely to be interpreted by the market as “rivals going bust”.
In a pre-close trading update covering the period since February 4, the contract caterer said volumes remain subdued but it has managed to improve operating margins.
Like-for-like revenues in the first quarter of 2021 are expected to be down 28% year-on-year.
The group's operating margin is expected to increase by around 1.3 percentage points to around 4.0% in the second quarter of the company’s fiscal year (which runs to the end of September) from 2.7% in the first quarter, resulting in a half year margin of around 3.4%, despite similar volumes quarter-on-quarter.
The FTSE 100 group said the pace of volume recovery remains uncertain but is encouraged by the pipeline of new business and client retention rats.
“We are controlling the controllable by managing our costs, adapting our operations and resizing our business. We remain confident in our ability to rebuild our group underlying margin above 7% before we return to pre-COVID volumes,” the company told investors.
“Looking further ahead, we are excited about the significant structural market opportunity globally, organic revenue growth, continued margin improvement and returns to shareholders over time,” it added.
Shares in Compass were up 1.9% at 1,487.5p.