Compass Group profits boosted by 'record year' of new business wins

Contract caterer Compass Group reported strong growth in all major European markets, most notably in the UK.

In its latest full-year results for the year ended 30 September 2023, the European arm of the business saw underlying operating profit grow by 31.5% to £392m as a result of strong margin progression.

The region also delivered organic revenue growth of 21.6% due to new business acquisitions in sectors such as business and industry, education, and sports and leisure.

Besides the UK, Germany and Turkey were also mentioned for having made a "significant contribution" to the region's results.

Globally, statutory profit before tax grew to £1.75b from £1.47b, while revenue rose from £26.4b to £31.3b. Underlying operating profit saw a 30% boost, with figures soaring from £1.64b to £2.12b.

Its strategic priorities for the year ahead involve focusing on "significant structural growth markets in core markets".

The group exited nine tail countries over the past year, five of which were in central and eastern Europe, which means the business now operates in roughly 35 countries.

Compass also noted there was a "sale of a business, site closures and contract renegotiations and terminations in the UK".

The group said it will prioritise investment in the business to fund future growth opportunities and is targeting "a strong investment-grade credit rating".

Compass group predicted capital expenditure will be around 3.5% of underlying revenue in 2024, with net M&A spending likely to be higher than in 2023.

Dominic Blakemore, group chief executive, said: "2023 was a strong year for Compass. North America continued its long track record of excellent growth whilst Europe delivered a second year of net new growth in the 4-5% range.

"During the year, we continued to successfully capitalise on the dynamic outsourcing trends, resulting in another record year of new business wins and continued strong client retention."

He added: "We are confident that the focus on our core markets, the ongoing investment in our market-leading offer and our proven processes will support high single-digit organic revenue growth in 2024."

Compass Group makes up roughly 15% of the global foodservice market, which is believed to be worth $300b (£240b).