Despite this seemingly bad news, CEO Dominic Blakemore has stated that the Group remains strong and resilient
Compass removes dividend amid global pandemic
- Group will not propose an interim or final dividend to save cash
- Planning monthly cost savings of £450mn by hiring workers on temporary salaries, furloughing or redeploying existing staff and reducing salaries across the workforce
- Shares drop by around 1% in early trading and are almost 30% lower since the crisis began
- Recommendation: We continue to recommend the shares as a Buy for lower risk investors
International catering group Compass came out this morning with a further trading update in light of coronavirus. While trading has remained in line with expectations, the theme of dividend cuts continues with the Group stating it won’t be paying interim or final dividends in this financial year. There was also the update that CEO Dominic Blakemore will take a 30% pay cut along with a 25% cut for other management
While the group is still working in sectors such as healthcare and part of its education, business and industry locations, 55% of its business in currently closed, including its sports and leisure activity. However, it’s not all doom and gloom, as the Group continues to be involved in new hospitals such as the Nightingale in London and are employing new employees from other sectors. Investors should also acknowledge the comments from the CEO stating how it is a strong, resilient organisation that is well-positioned to support its customers during this challenging period.
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