- Compass revealed its half-year organic turnover jumped by 8.5% to $22.6bn
Catering giant Compass Group has reiterated annual forecasts after enjoying a healthy expansion in first-half sales and profits.
The world’s largest catering provider revealed its organic turnover jumped by 8.5 per cent to $22.6billion in the six months ending March.
It credited just over half of this growth to net new business, with the remainder due to pricing and increasing like-for-like volumes.
Revenue soared by around $1.3billion to over $14.5billlion in North America thanks to higher demand from business and industry clients, and by 7.5 per cent to $7.1billion across international markets.
Client retention rates also remained at above 96 per cent, while Compass registered growth in all sectors, especially sports and leisure.
Combined with margins modestly ticking up to 7.2 per cent, the London-based firm’s underlying operating profits rose by 11.6 per cent on a constant currency basis to $1.6billion.
Upheld outlook: Compass Group has reiterated annual forecasts after enjoying a healthy expansion in first-half sales and profits
Compass still anticipates achieving a full-year ‘high single-digit’ uplift in underlying operating profits, supported by organic revenue increasing by over 7.5 per cent.
Dominic Blakemore, chief executive of Compass, said: ‘We have a diverse sector portfolio, wide-ranging client base and significant local purchasing scale.
‘Although not immune to macroeconomic pressures, we are confident in the resilience of our business model, strength of our value proposition and ability to capitalise on outsourcing opportunities.’
Since Covid-related restrictions were gradually loosened, Compass has benefited from the return of live sports events and workers commuting to their offices in far larger numbers.
It has also undertaken a sizeable acquisition spree, recently buying French food services business Dupont Restauration and Norwegian company 4Service for a combined $800million.
These deals followed the takeovers last year of Hoffmann in Germany and CH&CO, whose clients include Kew Gardens and Historic Royal Palaces, the charity that manages Hampton Court Palace and the Tower of London.
Mark Crouch, market analyst at eToro, said: ‘While rising labour costs, tariffs, currency swings, and tightening household budgets pose problems, Compass has so far navigated these with relative ease.
‘The question now is whether Compass can sustain this pace. Growth has been so strong that even the most bullish forecasts are being exceeded. And with growth already priced in, the bar for further upside is getting higher.’
Mamta Valechha, consumer discretionary analyst at Quilter Cheviot, added: ‘While the economic backdrop is perhaps not the most favourable right now, Compass’ services remain in demand as businesses look to reduce their own overheads.
‘As such, it has quite a resilient business model, which is both flexible and has significant scale.
‘Its supply chains are predominantly local, and the group remains well placed to benefit from any increase in outsourcing due to macro pressures.’
Compass Group shares were 0.15 per cent lower at £26.02 on late Wednesday morning, but have nonetheless risen by around 12 per cent over the past year.
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