- First-half profit ahead of estimates
- Full year and mid-term guidance maintained
- Investors wanted more, shares fall
Compass (CPG) fell 3% despite delivering a strong first-half profit beat on slight disappointment the global catering group did not upgrade its full-year outlook.
Shares in the FTSE 100 company are up 9% over the last year compared with a 2% gain in the benchmark index.
The world’s largest food group revealed an 11.6% increase underlying operating profit to the end of March to $1.63 billion, besting company-provided consensus forecasts looking for $1.61 billion.
Organic revenue was up 8.5% with net new business growth of 4.4%, with pricing contributing around 3% and like-for-like volume growth of approximately 1%.
WHAT THE COMPANY SAID
CEO Dominic Blakemore commented: ‘We are now in the fourth year of net new business growth within our 4-5% target range, supported by an improved performance in Europe and client retention rate of over 96%.
‘This year, we continue to expect high single-digit underlying operating profit growth, driven by organic revenue growth above 7.5% and ongoing margin progression.
‘Longer term, we remain confident in sustaining mid-to-high single-digit organic revenue growth with ongoing margin progression, leading to profit growth ahead of revenue growth.’
NO ANALYST UPGRADES
Analysts at Jefferies said the results were ‘solid across the board, supporting the equity story’ although they conceded the share price reaction may be muted.
Greg Johnson at Shore Capital commented: ‘With a further 10 basis point improvement (consistent with full year assumptions), reported operating profit increased 10.4% to $1.47 billion (up 11.6% on a constant currency basis), with earnings per share ahead 10.6% to $0.65, which was slightly above our estimates.
‘Dividend per share was raised 9.2% to $0.226 which is consistent with our full-year expectations.
‘With our estimates predicated on 8% growth and 10 basis points of margin enhancement, we would not expect to revise forecasts bar recent favourable FX moves,’ added Johnson.
