Caterer Compass Feeds Share Price Rise With Strong Revenue Recovery

By Dave Simpson
Caterer Compass Feeds Share Price Rise With Strong Revenue Recovery

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.

"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.