Compass Group raises forecast amid post-pandemic recovery

The Compass Group has increased its FY22 organic revenue growth guidance from 30% to 35%, due to a “significant acceleration” in growth and ongoing recovery of its base business.

The announcement comes as the company reported that its revenues for the third quarter ended 30 June 2022 (Q3) were at 109% of pre-Covid levels in 2019, including organic revenue growth of 43.4%.

Compass also confirmed its FY22 operating margin guidance of over 6%, and now expects its exit margin to moderate slightly from 7% due to the “strong” net new performance and ongoing inflationary pressures.

The group said that if current spot rates were to continue for the remainder of the year, foreign exchange translation would positively impact 2021 revenues by £533m and operating profit by £33m.

Overall, all three regions are now operating above 2019 levels, with North America as the highest performing region at 49.7% growth, followed by 41.9% growth in Europe, and 15.9% growth in the rest of the world.

Additionally, the catering company’s Business and Industry sector is now trading 100% above pre-Covid revenues on a run-rate basis. The group saw new business growth of 9.1%, and 6.9% rebased to 2019, with 96.1% retention 96.1% year-to-date.

Net M&A totalled £223m year-to-date as the company continues to expand its portfolio of brands, and the group also purchased 13.7 million shares at a total cost of £237m as part of its £500m share buyback programme.

Compass Group said: “While we are mindful of the challenging macroeconomic environment, we remain excited about the significant structural growth opportunities globally.

“Compass is very well positioned to capitalise on the increase in outsourcing opportunities. Longer term, we expect revenue and profit growth above historical rates, returning margin to pre-pandemic levels, and rewarding shareholders with further returns.”