Compass Group, UK

Expected "Profit growth above historical rates"

Dominic Blakemore, Group Chief Executive, Compass Group, is entering the new financial year with great confidence.
Compass Group
Dominic Blakemore, Group Chief Executive, Compass Group, is entering the new financial year with great confidence.

Catering company Compass Group reports a strong recovery from the pandemic effects in fiscal 2021. It said that as of the end of September 30, 2021, Q4 had delivered 88 percent of pre-Corona sales. The global market leader now plans to refocus on growth.

It added that revenue in the 2021 financial year was 6.3 per cent down on the previous year at £18.1bn (£21.55bn). But an operating profit of £811m (£522m, €966bn and €622bn respectively) pointed in the right direction. Dominic Blakemore, group chief executive, said: "Our strong financial recovery in 2021, including record new business wins and client retention, is a credit to our teams’ exceptional resilience, dedication and expertise in extraordinary circumstances."

All segments on the upswing

He said the Healthcare & Elder Care and Defense, Offshore & Remote sectors were significantly ahead of pre-pandemic volumes, with strong recoveries in Education and Sports & Recreation in Q4 (ended 9/30/2021). New business wins would have reached a record £2.1bn (€2.5bn), around half of which would have come from first-time outsourcing, with customer retention at 95.4 per cent.

According to the report, due to strong cash flow and increasing confidence in the group's performance, the global player is also looking to reintroduce dividends. "Looking ahead we are now focused on growth, driven by encouraging market trends and our ability to provide more bespoke, digital and sustainable solutions that meet the evolving needs of clients in a post-pandemic world. The tailwinds from first time outsourcing continue and, combined with our differentiated operating model and investment opportunities, we are in a strong position for growth." Blakemore added.

Expanding margins again

For the 2020/2021 financial year, which is now underway, Compass Group expects organic revenue growth of 20 to 25 per cent. The underlying margin for the full year is expected to be more than 6 percent, the forecast reads. Blakemore added: "With ongoing mobilisation costs and inflationary pressure, further improvement will be weighted towards the second half of the year as we return to underlying margin of around 7% by year end." He was enthusiastic about structural growth opportunities around the world, forecasting "revenue and profit growth above historical rates" and a return to paying dividends to shareholders. The fourth wave of Corona rolling through at least parts of Europe, including looming lockdowns for the unvaccinated and compulsory home offices, does not feature in the company's current reflections on the past and new fiscal year.
About Compass Group plc
Compass Group PLC is the world's leading food service company with annual revenues of £19.2 billion in the 2019/2020 financial year and £18.1 billion in the just completed 2020/2021 financial year. Compass operates in 45 countries, employs around 550,000 people and produces over 5.5 billion meals annually. Its range of services includes the provision of meals and a range of support services across its core sectors of Business & Industry, Healthcare and Seniors, Education, Sport & Leisure and Defence, Offshore and Remote through an established portfolio of brands.