22 July 2025
If you are covering the latest financial results from Compass Group, please find below a comment from Mamta Valechha, consumer discretionary analyst at Quilter Cheviot:
“Compass reported a good quality trading update this morning, beating expectations and raising its guidance. Group organic revenue growth is up 8.6%, which is an acceleration from the previous quarter and much stronger than peer Sodexo’s 3%. Furthermore, Compass is seeing growth across regions with North America up 9.6%, while international markets performed well at 6.6%. North America, which accounts for around 65% of revenue, was called out for delivering strong growth across all sectors as it benefited from favourable hospitality events.
“Net new business wins continue to grow in the middle of the group’s target range (4-5%), supported by strong client retention of over 96%. Both remain a key performance indicator for investors, so it is encouraging to see these stable at a time of slowing global growth.
“The business also announced a €1.5bn acquisition of Vermaat, a foodservice operator in the Netherlands, with a growing presence in Germany and France. While such an acquisition may make a share buyback much less likely in the near-term, the company does expect it to have a positive impact on both profit margins and earnings.
“Meanwhile, 2025 guidance has been raised on the back of organic revenue growth and M&A activity being better than expected. Compass is now guiding for organic revenue growth above 8% (from 7.5%) and operating profit growth to be towards 11% (from high single digit).
“Compass continues to have quite a resilient business model which is flexible and has significant scale. Sourcing is predominantly local, and the group remains well placed to benefit from any increase in outsourcing due to macroeconomic pressures.”
