Compass Group shares jump 11% as catering giant hikes sales outlook on surging profits and reveals £500m share buyback
- London-listed firm reports pre-tax profits of £632m in six months to 31 March
- This was up from £133m a year earlier as revenues rose 36.3% to £11.5bn
- Looking ahead, the group will be focusing on pricing changes to offset inflation
Compass Group has hiked its annual sales outlook after the world’s largest catering company saw profits surge almost fivefold.
The London-listed firm, headquartered in Surrey, reported pre-tax profits of £632million in the six months to 31 March, up from £133million a year earlier as revenues rose 36.3 per cent to £11.5billion.
Compass hiked its revenue guidance for the full-year from expected growth of 20-25 per cent to around 30 per cent, and announced a £500million share buyback – helping shares lift more than 11 per cent in morning trading.
The world’s largest catering company Compass has hiked its annual sales outlook after profits jumped almost fivefold with the easing of Covid-19 restrictions
Meanwhile, underlying revenue was 103 per cent of 2019 levels.
Despite the buoyant results, the company, which serves office workers, students and old-age homes across more than 40 countries, said it was cautious about the inflationary environment but maintained its annual operating margin outlook of over 6 per cent for the fiscal year 2022.
The conflict between Russia and Ukraine, both major wheat suppliers, has sent commodity prices through the roof, putting pressure on companies and forcing them to look at ways to curb rising costs.
Compass has sought to keep a tight lid on costs by cutting food expenses and reducing the number of suppliers it uses during the height of the pandemic.
Looking ahead, the group will be focusing on pricing changes to offset inflation.
It also says it is maintaining its aim to reach net zero greenhouse gas emissions across its global operations and value chain by 2050.
To do this, a number of measures will be taken including redesigning menus, promoting plant-forward ways of eating, reducing food waste, switching to renewable electricity on the operations side of things and electrifying the fleet.
In light of the results, Compass CEO Dominic Blakemore said: ‘We continue to recover strongly from the pandemic and have achieved the important milestone of revenue exceeding our pre-covid level on a run rate basis.
‘Net new business growth has been excellent, particularly in North America and Europe where we have mobilised a significant number of recent wins and benefited from our highest ever client retention rate.
‘Looking further ahead, we remain excited about the significant structural growth opportunities globally, leading to the potential for revenue and profit growth above historical rates, returning margin to pre-pandemic levels and rewarding shareholders with further returns.’