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Contract caterer Compass Group PLC on Wednesday announced a £500 million share buyback and said it has achieved an ‘important milestone’ with run-rate revenue topping pre-virus levels.
Compass shares were 9.5% higher at 1,728.00 pence each in London on Wednesday morning, the best performing FTSE 100 stock.
In the six months to March 31, pretax profit jumped to £632 million from £133 million the year before, as revenue rose 36% to £11.5 billion from £8.4 billion.
In the half-year that ended March 31, 2020, largely before the Covid-19 lockdowns, Compass achieved pretax profit of £771 million on revenue of £12.62 billion.
Compass noted its underlying revenue in the second quarter of financial 2022 was double the year prior, and it maintained a run rate above its pre-Covid levels.
Compass said the first-half revenue surge was driven by ‘notable’ volume recovery in its Business & Industry and Education businesses.
The company also works in the Sports & Leisure field, where it caters at stadiums and conference venues, sectors that also have benefited from a re-opening of the economy. It also has Healthcare & Senior Living and Defence, Offshore & Remote arms.
‘We continue to recover strongly from the pandemic and have achieved the important milestone of revenue exceeding our pre-Covid level on a run rate basis,’ Chief Executive Dominic Blakemore explained.
The emergence of the Covid-19 contagion hurt Compass. An absence of events
Due to its strong performance in the first half, Compass is upping its organic growth guidance, which is now expected to grow about 30%, lifted from the previous expectation of 20% to 25% growth.
Compass declared a 9.4p per share dividend, having not paid an interim payout a year prior. It is the company's first half-year dividend since the pandemic began, though it had paid a 14p final dividend for financial 2021.
Compass also announced a £500 million buyback for calendar 2022.
‘While investing in future growth, our increasing profit and cash flow continue to reduce leverage, which is now back within our target range. Our strong balance sheet and excellent growth prospects give us the confidence to commence a share buyback programme with up to £500 million during this calendar year,’ Compass said.
‘Looking further ahead, we remain excited about the significant structural growth opportunities globally, leading to the potential for revenue and profit growth above historical rates, returning margin to pre-pandemic levels and rewarding shareholders with further returns.’
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