Compass continues cost cutting as profits slump amid pandemic

The group’s pre-tax profits slumped to £427m in the year to September 30 from £1.7bn previously as the crisis devastated the global hospitality industry and hit its school and workplace canteen services.

Compass said it returned the business to profit in its final quarter after renegotiating contracts, cost control and seeing some improvement in trading.

It said it would continue to overhaul its operations, with ongoing “resizing” actions to weather the coronavirus crisis.

It has already slashed annual labour costs by around £280m at sites such as offices, factories and sports venues, with another £70m trimmed from its head office operations.

It did not reveal how many roles have been axed, though the group employs a large number of casual staff and said it was able to limit job losses through Government support schemes.

Compass employs more than 40,000 people in the UK out of a global workforce of around 600,000 across 45 countries. Its largest market is north America.

Dominic Blakemore, group chief executive of Compass, said: “2020 was a challenging year for Compass.

“Although the prospects of a vaccine are encouraging, the resumption of lockdowns in some of our major markets shows that we have to continue to take proactive actions to control the controllable and ensure the business can thrive despite the ongoing pandemic.”

The pandemic has seen schools close and events cancelled worldwide, with catering to businesses also badly hit as lockdowns have forced offices to shut and workers to stay at home.

Compass raised £2bn in new capital in May to boost its balance sheet, which came on top of efforts launched in April to slash its overall cost base by £500m a month, including axing its interim and final shareholder dividend payouts and cutting executive salaries.

Analyst Anna Barnfather at Liberum said the focus was now on the outlook for Compass.