18 March 2020 | Herprett Kaur Grewal
Catering companies have reported that they will take a hit in their revenues because of the turbulence and uncertainty caused by the coronavirus outbreak.
French-owned support services firm Sodexo reported that its results for the first half of 2020 are "expected to be in line with internal forecasts".
The company said the Covid-19 pandemic started to be a concern in the second half of January for its business in China, which led to a "rapid deterioration worldwide in February, moving from region to region and generating more and more government precautionary measures to limit the spread of the virus".
It states that it is "coordinating globally, regionally and locally to manage its business continuity and pandemic plans to support and protect its employees and consumers across all of its geographies". This includes "precise and proactive management" of its workforce to respond to specific and changing conditions and a reinforcement of food safety.
Sodexo said: "The first-half figures include a mild shortfall in revenues in China and Italy due to Covid-19 that we have been able to absorb. As much as we have the systems and granularity of reporting to identify with precision the impact of Codiv-19 ex post, it is too early to assess the different situations and their impact moving forward. This is due to the variety of situations we are facing, decline in traffic, full or partial closure of sites, and variability between sites, countries and regions."
But it added that based on the past few weeks' observations in China, Italy, France and the US, "we can see that for each 100 million of revenue decline the impact on underlying operating profit is around -30 per cent depending on the country and the segment".
The company is currently running "a full bottom-up forecast exercise based on closures and revised traffic estimates" and will provide an update on 9 April, along with its H1 results.
Currently, it says, "early estimates, given the many moving parts, could be for an impact of around billion on annual revenues".
Separately catering group Compass has said that the coronavirus will mean that its interim profits will be much lower than expected owing to closures of sports events, schools and leisure businesses.
As a result of unexpected closures and containment policies being enforced by governments it said it could mean profits are 25 to 30 per cent lower than expected.