March 17, 2020 / 7:51 AM / 24 days ago

CORRECTED-UPDATE 1-Catering giant Compass serves profit warning as virus hits

(Corrects lead and fifth paragraph to clarify H1 profit to be 125-225 mln pounds lower than expected, not expects profit to be between 125-225 mln pounds)

March 17 (Reuters) - The world’s biggest catering firm Compass Group warned on Tuesday that its half-yearly operating profits would be lower than expected due to the steps taken in Europe and North America to contain the spread of the coronavirus.

Compass provides meals for office workers, armed forces and school children in 45 countries and employs around 600,000 people, and steps including the closure of schools and moves by businesses to work-from-home would hit its volumes “severely”, it said.

“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,” the company said in a trading update.

“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.”

Compass said operating profit for its first half would be 125 million pounds ($152.73 million) to 225 million pounds lower than expected. It reported underlying operating profit of 951 million pounds in the same period a year ago.

The company had already warned in November that hundreds of jobs could be in jeopardy as it cut costs in the face of a weakening economic outlook in Europe that had dented the company’s volumes and margins.

It said organic growth for the first half of 2020 would now be between zero and 2%. In February it forecast 2020 organic growth around the mid-point of a 4-6% range.

“We are working to protect our cash flow and are pro-actively managing our capital expenditure and working capital,” Compass said, adding that it still had significant headroom and liquidity in its current credit facilities.

$1 = 0.8185 pounds Reporting by Yadarisa Shabong in Bengaluru; editing by Patrick Graham

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