Compass Group makes 'encouraging start' to year, shares up

Shares in foodservice company Compass Group rallied on Thursday after the firm said it had experienced an "encouraging start" to the year, driven by continued improvement across all sectors.

Compass said group organic revenue grew by 38.6% in the first quarter, with revenues reaching 97% of their pre-Covid levels, largely driven by new business, continued strong client retention and an ongoing recovery in its base business as the emergence of the Omicron variant having only "a limited impact" during the period.

The FTSE 100-listed firm stated its performance improved across all regions during the period, with four out of five sectors now trading above 100% of 2019 revenues.

Growth was "particularly strong" in North America, while in Europe, all sectors traded well except for business and industry, which continued to be impacted by reopening delays.

"We are encouraged by the strong start to the year, excellent new business wins and continued strong client retention. However, we are mindful of some impact from the Omicron variant in Q2, with business and industry clients delaying their return to work, some sports and leisure events being postponed and Education facilities extending remote learning," said Compass.

"Our guidance for FY22 remains unchanged. We expect full-year organic revenue growth of 20-25%, with quarterly growth rates moderating through the year, reflecting more challenging comparatives."

As previously stated, full-year underlying operating margin is expected to be over 6%, returning to around 7% by the year-end. Margin progression will be second-half weighted, with the first-half margin anticipated to be around the Q4 2021 exit rate."

Looking ahead, the company said it was "excited" about structural growth opportunities globally, which could lead to revenue and profit growth above historical rates, returning margin to pre-pandemic levels.

As of 1015 GMT, Compass shares were up 7.68% at 1,780.50p.