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Compass Group PLC on Monday announced a new share buyback and more than doubled its dividend, but said operating profit growth will be slower in the year ahead as it has regained pre-pandemic business levels.
The Surrey-based contract caterer said annual earnings improved, on the back of a ‘record net new business’. Compass said pretax profit jumped to £1.47 billion in the financial year that ended September 30 from £464 million the year before.
Revenue rose 43% to £25.51 billion from £17.91 billion, topping company-compiled consensus of £25.1 billion.
The company cited a post-pandemic recovery, highlighting its Sports & Leisure and Education units. Revenue in Sports & Leisure surged to £3.68 billion from £1.55 billion, while revenue in Education jumped to £4.83 billion from £3.27 billion.
Revenue in Compass’s largest unit, Business & Industry, grew to £8.40 billion from £5.61 billion.
‘The group’s performance surpassed our expectations both in terms of net new business growth and base volume recovery, with Business & Industry now operating above its pre-pandemic revenues. The strong growth trends seen in the first half have continued, with net new business accelerating through the year in all our regions,’ Chief Executive Dominic Blakemore said.
Compass lifted its total dividend to 31.5 pence per share from 14.0p. In addition, it announced a further £250 million share buyback, taking the current programme to £750 million.
For financial year 2023 which began in October, Compass expects constant-currency underlying operating profit growth of above 20%, slowing from 88% in the pandemic-recovery boosted year just completed. It will be heavily weighted towards the current first financial half. However, Compass expects the underlying operating margin to rise to above 6.5% from 6.2%.
Compass shares were down 2.6% to 1,802.00 pence each in London on Monday morning.
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