Research Update: Food Service Provider Compass Group PLC Outlook Revised To Negative Amid COVID-19 Outbreak; 'A/A-1' Ratings Affirmed

The majority of Compass Group PLC's sports and leisure and education businesses in continental Europe and North America have temporarily closed, while operations in its business and industry segments have significantly reduced following the COVID-19 outbreak. Although it is currently difficult to predict the extent of the pandemic's effect, we now expect the group's revenue and S&P Global Ratings-adjusted EBITDA could drop by as much as 25% in the financial year ending Sept. 30, 2020 (FY2020) compared to FY2019. We also expect the group to considerably scale back capital expenditure (capex), interim dividends, and acquisition spending in FY2020 to offset the reduction in operating profit and return to its stated financial policy targets from FY2021. We are affirming our 'A/A-1'

...- The majority of Compass Group PLC's sports and leisure and education businesses in continental Europe and North America have temporarily closed, while operations in its business and industry segments have significantly reduced following the COVID-19 outbreak. - Although it is currently difficult to predict the extent of the pandemic's effect, we now expect the group's revenue and S&P Global Ratings-adjusted EBITDA could drop by as much as 25% in the financial year ending Sept. 30, 2020 (FY2020) compared to FY2019. - We also expect the group to considerably scale back capital expenditure (capex), interim dividends, and acquisition spending in FY2020 to offset the reduction in operating profit and return to its stated financial policy targets from FY2021. - We are affirming our 'A/A-1' long- and short-term issuer credit ratings on Compass, as well as the 'A' issue rating on the group's senior unsecured debt. - The negative outlook reflects our view that the COVID-19 outbreak will significantly...

Research Update