25 July 2023
If you are covering Compass Group’s latest results, please see the following comment from Mamta Valechha, equity research analyst at Quilter Cheviot:
“Compass, the world’s largest contract catering company, reported a strong set of Q3 numbers this morning which were in line with expectations and reiterated guidance.
“Despite tough comparators, organic revenue growth was up 15% as the group lapped the reopening of all sectors in the prior year. Year to date, organic revenue growth is up 21%, having benefited from strong client retention (96.7%), positive pricing (7%) and volume growth (9%). Most importantly, however, is the fact that net new business wins of 5% continue to track ahead of historical levels as first-time outsourcing trends remain strong.
“Compass no longer provides a breakdown by sector, but all regions saw double digit revenue growth. As a result, guidance was reiterated with organic revenue growth of 18% expected, alongside an underlying operating margin in the range of 6.7%-6.8%
“This morning’s results strengthen an already positive outlook for Compass, particularly as the outsourcing market remains so attractive. Complexities such as increased regulation, sustainability, changing client dietary expectations and inflation are all here to stay, and Compass is primed to make the most of them.”
