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Caterer Compass Feeds Share Price Rise With Strong Revenue Recovery

By Dave Simpson

Compass Group, the world's largest catering firm, said on Thursday 3 February that its first-quarter revenue was near pre-COVID-19 pandemic levels and stuck to its annual forecast, lifting its shares.

Four Of Five Main Business Sectors Exceeded 2019 Revenues

The British company, which serves office workers, students, old-age homes and armed forces across 45 countries, said that four of its five main business sectors had exceeded their 2019 revenues.

Omicron Impact

But while Compass confirmed its full-year forecast for organic revenue to rise up to 25%, it said that it is being cautious of any impact from the new COVID-19 Omicron variant.

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"I think the Delta between Q1 and Q2 will really all be about the Omicron impact," Compass chief executive Dominic Blakemore said on a call with analysts. "But as we've seen in the UK, we hope that it's short and sharp."

Shares, Organic Revenue And Overall Revenue

Shares in Compass climbed 7.7% to 1,781 pence at 1022 GMT on Thursday 3 February, making them the top gainer on the FTSE 100, after it said that organic revenue in the quarter ended 31 December jumped approximately 39%, much above the nearly 29% expected by analysts on average. Overall revenue reached 97% of its pre-COVID-19 pandemic level.

Analysts At Bernstein Statement

"The key data point for this quarter was whether Omicron was going to throw Compass off its FY (full-year) guidance, and the strong start to the FY has allowed guidance to be maintained," analysts at Bernstein said in a note.

Trends In New Business And Business From Existing Clients

Blakemore said that trends in new business and business from existing clients should remain strong in the second quarter, with "perhaps a touch of acceleration in pricing".

Full-Year Profit Margin Target

Compass, the food service brands of which span Levy, Chartwell and Bon Appetit, maintained its full-year profit margin target of more than 6%, with an exit rate of approximately 7%, as it managed costs and renegotiated contracts to make up for lower trading volumes.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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