Compass Group raises profit forecast as FTSE 100 catering giant’s sales figures bounce back after return of live events and commuting
- Compass now expects operating income to grow by around 30% this year
- The Surrey-based company announced a 60% increase in its interim dividend to 15 pence
- CEO Dominic Blakemore said the company has no plans to go public on the NYSE
Compass Group has improved its full-year outlook following a continued recovery in live events and employees returning to their offices.
The world’s largest contract catering company now expects its operating profit to increase by around 30 percent this year, compared to a previous forecast of more than 20 percent.
FTSE 100-listed Compass revealed that underlying core profit in the first half was more than £1bn, up 41.1% on the previous year.
Strong recovery: Catering giant Compass Group has improved its full-year outlook, revealing core underlying profit for the first half passed £1bn
Compass expects full-year organic sales growth of approximately 18 percent, after growing by a quarter in the first half of the fiscal year.
It now forecasts an underlying operating margin of 6.7 to 6.8 percent for the year, compared to the average market expectation of 6.7 percent and pre-pandemic levels of around 7 percent.
About half of the sales growth in the first half year was attributed to a healthy recovery of comparable volumes amid the easing of pandemic restrictions, price increases and new customer acquisition.
Trading across all regions and industries performed well, but was particularly strong in North America, Compass’ largest market, where sales skyrocketed from around £3bn to £10.7bn.
Sales were further boosted by strong demand from the business and industrial segment, as people commuted more regularly to their offices, and increased attendance at sporting and leisure events.
Following the result, the Surrey-based company announced a 60 per cent increase in its interim dividend to 15p per share, alongside a share buyback to £750m.
Dominic Blakemore, CEO of Compass Group: ‘Despite macroeconomic weakness, the outsourcing market remains very attractive.
“We believe that many of the complexities driving outsourcing, such as increased regulation, changing customer and consumer expectations and inflation, are here to stay.”
He added, “We expect longer term growth opportunities in the market to support mid to high single digit organic growth and a path back to our historic margin leading to earnings growth over revenue growth.”
Meanwhile, Blakemore told Reuters that Compass had no plans to list on the New York Stock Exchange, though the company plans to switch its reporting currency from British pounds to US dollars from early October.
A growing number of London-listed companies are listed on Wall Street or planning to go public in the hopes of attracting more investment and higher valuations.
Last week, semiconductor designer ARM filed to sell its shares on the NYSE after opting not to hold an IPO in London despite intense lobbying from the UK government.
Building materials supplier CRH Holdings announced in March that it would move its primary listing to the US, where it generates more than 90 percent of total sales.
Education publisher Pearson, Paddy Power owner Flutter and OakNorth Bank are also reportedly considering a move to the United States.
Compass Group Shares were 2.1 percent higher at £21.08 on Wednesday morning. They’ve grown about 30 percent in the last 12 months.