This content is not available in your region

Caterer Compass rises on new business appetite

By Reuters

<div> <p>By Yadarisa Shabong</p> <p> -The chief of Compass Group said on Tuesday new business, especially from clients outsourcing their kitchen needs for the first time, will help the British caterer regain its pre-pandemic size and grow faster than before. </p> <p>Shares in the world’s largest catering company reversed early losses to trade up 3% following the comments from Chief Executive Dominic Blakemore on an earnings call.</p> <p>“The pipeline is exceptional … we’ve got the digital and climate offers to win with the balance sheet to exploit all of these opportunities,” Blakemore said in a call with analysts after the group reported better-than-expected annual profit and resumed dividend payments.</p> <p>Compass guided to an underlying operating margin of more than 6% for fiscal 2022, just below average analysts’ forecast of 6.5%. The outlook had sent shares falling 2.5% in early trade. </p> <p>Food catering volumes picked up from pandemic lows, as students returned to universities and schools, sports fans filled stadiums and crowds attended events again. Fourth-quarter revenue recovered to 88% of 2019 levels.</p> <p>The company said it would return to pre-pandemic margins of about 7% by the end of the fiscal 2022 year, although revenue and volumes would not exceed 2019 on a full-year basis until 2023.</p> <p>“All in, we would say this is a solid print with the most positive message on how they will exit 2022,” Bernstein analyst Richard Clarke said.</p> <p>Blakemore said the group was varying menu choices and substituting products experiencing high levels of inflation to mitigate some pressures.</p> <p>“We are seeing a trend towards local sourcing in many of our markets because of the disruptions in supply chain,” he told Reuters.</p> <p>Net new business wins totalled a record 2.1 billion pounds, around half of which were from companies outsourcing for the first time to cut costs, it said. </p> <p>Compass’ underlying operating profit rose 55% to 811 million pounds ($1.1 billion), versus analysts’ average view of 797 million pounds.</p> <p>Compass, which suspended dividends in April 2020, said it would pay an annual dividend of 14 pence per share.</p> <p>($1 = 0.7470 pounds)</p> </div>