Compass profits hit £1.89bn amid surging sales
Looking ahead, the group expects 2024 underlying operating profit growth towards 13% delivered through high single-digit organic revenue growth and ongoing margin progression
Catering company Compass Group has reported a 26.1% increase in operating profit to £1.89bn for the year ended 30 September 2023.
The group also recorded a 21.6% increase in revenues to £31bn compared with the previous year. Its operating margin was also up 60bps to 6.8% year on year.
The group said its strong growth reflects the benefits of operating leverage, operational efficiencies and appropriate pricing to manage inflation headwinds, and is despite mobilisation costs associated with new business growth.
The European arm of the business saw underlying operating profit grow by 31.5% to £392m as a result of strong margin progression.
The region also delivered organic revenue growth of 21.6% due to new business acquisitions in sectors such as business and industry, education, and sports and leisure.
Looking ahead, the group expects 2024 underlying operating profit growth towards 13% delivered through high single-digit organic revenue growth and ongoing margin progression.
Dominic Blakemore, Compass Group chief executive, said: “2023 was a strong year for Compass. North America continued its long track record of excellent growth whilst Europe delivered a second year of net new growth in the 4-5% range. During the year, we continued to successfully capitalise on the dynamic outsourcing trends, resulting in another record year of new business wins and continued strong client retention
“We have a strong, balanced, and sustainable growth model across the Group. Our size, strength and scale enable us to continue investing in our operating model, further enhancing our competitive advantages. We have exited nine tail countries to focus on markets with the greatest growth opportunities and our strong cash generation continues to fuel investment in our business through capex and attractive M&A.”
He added: “The business is in great shape operationally and financially and well positioned for a more focused growth phase. Despite some macroeconomic uncertainty, favourable market dynamics continue and, with a global market share of less than 15% and around 50% of the market still self-operated, we have an exciting structural growth opportunity. We are confident that the focus on our core markets, the ongoing investment in our market-leading offer and our proven processes will support high single-digit organic revenue growth in 2024.
“Going forward, we expect to sustain mid to high single-digit organic revenue growth and ongoing margin progression leading to profit growth ahead of revenue growth and increased cash generation. We are investing in capex and strategic M&A to support future growth, returning any surplus cash through the share buyback programme, and delivering long-term, compounding shareholder returns.”
