23 July 2024
If you are covering Compass Group’s latest financial results, please find below a comment from Mamta Valechha, equity research analyst at Quilter Cheviot:
“Compass’ third quarter trading update highlights the attractiveness of the outsourcing market as the results came in ahead of expectations. Group organic revenue growth is up 10.3%, ahead of expectations (9.1%), with the beat driven by better-than-expected performance in Europe (12%). However, this was not just a European growth story with all regions performing well, including North America where revenue was up 9.9%.
“While the statement didn’t break it down, it did mention that net new business wins positively contributed to growth and accelerated into the quarter. Volume growth positively contributed too given the group’s value and quality proposition it offers versus the high street. Pricing while positive, did moderate however, in line with inflation, but it is pleasing to see Compass offset this with strong business growth.
“As a result of this positivity, 2024 guidance has been upgraded once again. Compass now expects underlying profit growth above 15%, whereas it previously targeted ‘towards 15%’, with organic revenue growth above 10%, again instead of ‘towards 10%’.
“The trends that have driven this positivity remain strong for Compass. The outsourcing market remains very attractive, driven by complexities such as increased regulation, sustainability, changing dietary expectations and inflation, all of which are here to stay and something companies want and need to address. Management has arranged the business well for this and as such Compass looks in prime position for the rest of the year.”
