The ratings on U.K.-based Compass Group PLC reflect its leading position in the food-service market, its low capital intensity and low capital requirements, and its relatively stable cash flows. These positive characteristics are offset partially by the competitive nature of the industry as well as the group's moderate financial profile. With annual sales of about £10 billion, Compass remains the world's largest food-service provider. It retains sufficient scale to be competitive in this market and is about 17% larger than its closest competitor Sodexho Alliance S.A. (BBB+/Stable/A-2). The group's operations are relatively resilient to economic cycles, producing fairly stable free cash generation given limited capital expenditures (about 2% of sales) and contract retention rates close to 95% in previous years.
