Foodservice firm Compass (CPG) dished up an impressive set of first half results and unveiled a big share buyback as business returned to pre-pandemic levels.

Shares jumped almost 10% to £17.32 on the news, with analysts likely to increase their full year forecasts.


Underlying revenues for the six months to March were up 37.9% to £11.6 billion thanks to strong growth in North America and Europe.

New business wins were particularly encouraging, with first half net new revenues exceeding those for the whole of the previous financial year.

Growth was as strong in the second quarter as in the first quarter, when like for like revenues were up 38.6%, leading the company to raise its outlook for the full year from between 20% and 25% to a 30% increase.

Client retention reached its highest ever level of 95.8%, while there was a notable pick-up in business volumes in Business & Industry, due to the return to work, and in Education.

Underlying revenues recovered to 99% of their pre-Covid levels during the quarter and are now back above those levels and rising.

Moreover, margins are recovering rapidly due to operating leverage, ending the half at 5.8% against 3.4% the previous year, and are projected to by as much as 7% by next March.


The group believes there are still ‘significant’ opportunities to grow its market share in first-time outsourcing, including among small- and medium-sized businesses.

It has expanded its offering to include digital offerings, vending kiosks and ‘ghost’ kitchens which can deliver food at scale on a local level, giving it access to new types of clients.

Also, thanks to the scale of its operations and its buying power, it can reduce the impact of inflation for customers which acts as a tailwind in winning new business.


With underlying free cash flow topping £550 million in the half and net debt down to just 1.3 times EBITDA (earnings before interest, taxes, depreciation and amortization), the firm announced it would buy back up to £500 million of its own shares this year as a way to reward shareholders.

The combination of fewer shares in circulation, faster than expected revenue growth and higher margins mean analysts are going to have to revise up their earnings forecasts for this year and future years.

Analyst Greg Johnson at Shore Capital commented: ‘We see upgrades to estimates for the full year, whilst accelerating new business momentum supports a highly attractive investment case over the medium term.’


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Issue Date: 11 May 2022