Compass Group’s profits rise as working from home decreases

Compass Group is rewarding shareholders with a major dividend increase after massive profit growth over the past year.

Compass’ underlying operating profits rose 16.4 percent at constant exchange rates to $3 billion in the year ended September, with the company citing a continued recovery in the number of employees returning to the office as a key market trend.

The world’s largest hospitality company has proposed a final dividend of 39.1 cents per share, giving it a full-year dividend of 59.1 cents per share, up 13.7 percent on the previous year.

Compass delivered growth across all regions, especially in its largest revenue region, North America, where underlying revenues rose 10.9 percent to $28.6 billion.

The London-based company also told shareholders on Tuesday that it had benefited from higher footfall and consumer spending across its education and sports-focused businesses.

European revenue grew significantly, rising 15 percent to nearly $10 billion on an underlying basis, driven by double-digit percentage growth from sectors such as education and defense, offshore and remote.

Compass has strengthened its presence across the continent this year with two major acquisitions: Hoffmann in Germany and Reading-based CH&CO, whose clients include Kew Gardens and the Royal Opera House.

It withdrew from five countries (Argentina, Angola, Brazil, China and the United Arab Emirates) and agreed to leave another four countries, mainly in Latin America.

Dominic Blakemore, CEO of Compass, said: ‘2024 has been a year of strong operational and financial performance, with net new business growth accelerating as expected in the second half.

“The company continues to successfully respond to dynamic market trends and leverage its proven competitive advantages to achieve higher sales and profit growth.”

However, Compass expects underlying operating profit to increase by only a “high single digit” percentage in 2025, driven by “continued margin progression” and organic revenue growth of more than 7.5 percent.

Compass Group shares fell 2.5 per cent to £25.88 on Tuesday morning, making them one of the five biggest fallers on the FTSE 100 Index.

Adam Vettese, a market analyst at eToro, said the company’s prospects “might just be getting ahead of the story because of the high bar.”

“Shares are down this morning, but are still up almost 20 percent for the year and could well represent a buying opportunity if they look to continue their longer-term trajectory.”

Compass operates many company canteens and provides catering services to prominent sporting venues such as Wimbledon and Chelsea Football Club.

The country experienced a significant downturn in trade during the early part of the Covid-19 pandemic, as employers encouraged staff to work from home if possible, and sports teams often played matches behind closed doors.

Vettese added: “Hybrid or remote workers being asked to come back to the office is clearly a hot topic at the moment, with many not wanting to give up their flexibility.

‘However, Compass Group is benefiting from this move; as the world’s largest caterer, they operate many workplace canteens and are welcoming volume back through the doors.”

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