Compass Group profits rise as work from home declines

Compass Group is rewarding shareholders with a significant dividend increase after revealing extraordinary profit growth over the last year.

Compass’ underlying operating profit rose 16.4 percent at constant currency levels to $3 billion in the year ended September, with the company citing a sustained recovery in workers returning to offices as a trend. market key.

The world’s largest catering company has proposed a final dividend of 39.1 cents per share, giving it a full-year dividend of 59.1 cents per share, up 13.7 percent year-over-year former.

Compass achieved growth in all regions, especially in its largest territory by sales, North America, where underlying revenue increased 10.9 percent to $28.6 billion.

The London-based firm also told shareholders on Tuesday that it had benefited from higher attendance and consumer spending within its education and sports-focused operations.

European sales increased significantly, rising 15 percent to nearly $10 billion on an underlying basis thanks to double-digit percentage growth from industries such as education and defense, offshore and remote.

This year Compass has strengthened its presence across the continent with two major acquisitions: Hoffmann in Germany and Reading-based CH&CO, whose clients include Kew Gardens and the Royal Opera House.

It withdrew from five countries (Argentina, Angola, Brazil, China and the United Arab Emirates) and agreed to leave four others, mainly in Latin America.

Dominic Blakemore, chief executive of Compass, said: “2024 has been a year of strong operational and financial performance, with net new business growth accelerating in the second half as expected.

“The company continues to successfully capitalize on dynamic market trends, using its proven competitive advantages to drive increased revenue and profit growth.”

However, Compass expects underlying operating profits to rise only by a “high single-digit” percentage in 2025, driven by “continued margin progression” and organic revenue growth by more than 7.5 percent.

Compass Group Shares fell 2.5 per cent to £25.88 on Tuesday morning, making them one of the top five losers on the FTSE 100 index.

Adam Vettese, market analyst at eToro, said the company’s prospects were “perhaps simply getting ahead of the narrative due to the high bar set.”

“Shares have fallen this morning but are still up almost 20 per cent year-to-date and could well represent a buying opportunity if they want to continue their long-term trajectory.”

Compass operates many corporate canteens in workplaces and provides hospitality services to major sporting venues such as Wimbledon and Chelsea Football Club.

It experienced a significant drop in trading during the early part of the Covid-19 pandemic, when employers encouraged their staff to work from home if possible, and sports teams often played matches behind closed doors.

Vettese added: “Hybrid or remote workers being asked to return to the office is clearly a hot topic right now and many do not want to give up their flexibility.

“However, Compass Group benefits from this move: as the world’s largest caterer, it manages many workplace canteens and welcomes the volume coming back through the doors.”