Food and support services provider Compass Group, one of the world’s biggest catering firms, has announced an improvement in margins in its third quarter financial report.
The trading statement updates investors on the group’s performance since 31 March 2021.
The group’s organic revenue grew by 36.4 per cent, lapping the first full quarter of Covid-19-hit revenues. Revenues in the areas of business and industry catering and education improved gradually, while the more defensive sectors of Healthcare and Seniors, and Defence, Offshore and Remote continued to show some growth.
The sports and leisure business benefited significantly from higher attendance levels following the easing of restrictions in North America.
Retention rates remained strong at 95.4 per cent, while what the company calls the “flight to trust” continued, leading to strong new business wins across all regions, with around 50 per cent from first-time outsourcing.
The results take into account resizing costs of £21 million in Q3 – mainly in Europe – with the group’s operating margin increasing by 80 basis points (bps) from 4.2 per cent in Q2 to 5.0 per cent in Q3.
The group’s analysts are anticipating a pre-tax profit for the whole year of £1.75 billion –a rise of 15 per cent over last year – and shares in the group have reached an all-time high, says the statement.
Predictions for Q4, with the continuing reopening and mobilisation of sites in some of the group’s biggest markets, were for trading at 80-85 per cent of pre-pandemic levels, with an operating margin expected to increase by another 50-100bps to 5.5 per cent to 6.0 per cent.
The statement concludes: “We are confident in our ability to return to a group underlying margin above 7 per cent before we return to pre-Covid volumes. In the longer term, we remain excited about the significant structural market opportunities globally, the potential for further revenue and profit growth, and shareholder returns over time.”
Compass Group has embarked on a £470 million programme of acquisitions in the past year, and is proposing a €475 million takeover of Nordic firm Fazer Foods.
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