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While the market was much concerned about the inflationary pressures on the catering sector, Compass’s H1 results were very reassuring, with both client retention and net new business historically high. The upgraded guidance and the surprising share buy-back programme in the current FY are worth highlighting. We expect a higher consensus and higher target price.
Companies: Compass Group PLC
The group saw strong revenue figures in the past quarter and was not far off the entire restoration of revenue. The FY guidance of organic growth range and underlying operating margin is maintained, despite the Omicron effects.
Compass reported in line FY21 results and a weaker-than-consensus FY22 margin guidance due to short-term headwinds. The expected alleviation of these negatives in H2 22 and the cost reduction programmes should support a nearly-full recovery of margin in FY23. As a result, the FY22 consensus should come in lower but the FY23 consensus should be more optimistic.
Compass again delivered an encouraging margin improvement in Q3 and anticipated a further “normalisation” in terms of business volume and margin for Q4.
After reporting market-beating operating results in Q2, Compass will continue to work on rebuilding its operating margins (guiding for a further 30-80bp progression), while the evolution in revenue is expected to remain moderate.
The UK-based catering giant’s Q1 trading update indicates that the revenue hit was and would be harder than expected while the operating margin keeps improving. Consensus might go down though.
The UK-based leading caterer reported its FY20 results, which missed the market’s expectations but indicated an ambitious margin forecast for Q1, despite the revenue recovery being with many unknowns.
The catering industry leader reported a mediocre Q3 trading performance but, fortunately, there was an improvement in the drop-through.
After communicating a depressed industry outlook and calling for a huge amount of recapitalisation of £2bn, the leading contract caterer, Compass, saw it share price fall by 3.4% yesterday. Considering the smaller rivals’ weaker profitability and the capacity of equity fundraising from the capital markets, the share prices of other sector participants are also being penalised by the news.
Compass’s share price sank over 7.6% yesterday due to macro-led slowdown prospects in Europe, despite the deliverance of satisfying FY19 results. The gloomy forecast meanwhile has penalised the whole catering industry.
Compass has reported another good quarterly performance.
The deceleration in revenue growth in Europe has been offset by the better than expected strong revenue growth in North America and an improving operating performance in the rest of world (RoW).
Compass released a good set of H1 19 results.
The encouraging organic growth was mainly driven by the solid performance in North America and the good improvement in Europe (especially the significant Defence contract wins in the UK).
However, several major contracts in Europe still in the ramp-up phase, higher mobilisation costs and the weaker high street trading environment in the UK, should all continue to put pressure on profitability for the rest of the year.
Q1 organic growth was +5.9%, beating expectations.
Compass raised its guidance on 2018 revenues, to “above the middle” of a 4-6% range (vs. c.5% previously).
The company reiterated its expectations of a modest margin improvement, loaded on H2.
Richard Cousins and his family have died in a tragic seaplane crash in Sydney on New Years Eve.
Organic growth was +4.0% for the year (H2 reported +10.1%), broadly in line with consensus estimates.
The H2 operating profit (excluding associates), at £803m (+10.3%), was in line with expectations, with a 7.1% margin (stable vs. H2 16).
The operating margin for the year stands at 7.4%, a 20bp improvement.
The H2 EPS grew +12.7%. (+18.0% for the year).
2018 outlook: organic growth at c.5%, weighed on H2.
Modest margin improvement, with a flat or marginally lower H1 and a rebound in H2.
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