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Caterer Compass feeds share price rise with strong revenue recovery

Catering giant Compass on track to scale pre-pandemic growth
Catering giant Compass on track to scale pre-pandemic growth   -   Copyright  Thomson Reuters 2022
By Reuters

By Juliette Portala

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

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

But while Compass confirmed its full-year forecast for organic revenue to rise up to 25%, it said it was being cautious of any impact from the new COVID-19 coronavirus 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 in Compass climbed 7.7% to 1,781 pence at 1022 GMT, making them the top gainer on the FTSE 100, after it said organic revenue in the quarter ended Dec. 31 jumped around 39%, much above the nearly 29% expected by analysts on average. Overall revenue reached 97% of its pre-pandemic level.

“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.

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”.

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

($1 = 0.7377 pounds)