Compass lifts revenues outlook as trading rebounds despite cost pressures

Catering giant Compass has hiked its annual sales outlook as it cheered a bounce back to pre-pandemic trading thanks to workers beginning to return to offices worldwide.

Shares in the group jumped 9% as it saw half-year profits increase to £632 million in the six months to March 31, up from £133 million a year earlier on revenues up 36.3% at £11.5 billion.

It raised its revenue guidance for the full-year from growth of 20% to 25% to around 30% after the first half bounce-back and unveiled plans for up to £500 million of share buy-backs in 2022.

But the firm said it was facing soaring costs as the Ukraine war pushes commodity prices higher, while it also flagged ongoing staff shortages in the wider global jobs market and supply chain woes.

It is reviewing the prices it charges as part of efforts to offset surging costs, which have so far paid off, helping it keep its profit margin forecasts unchanged for the year.

The group added that rising inflation was also driving a push towards outsourcing as schools and companies look to make savings.

It said: “Compass continues to recover strongly from the pandemic, having only been temporarily impacted by the Omicron variant at the beginning of the calendar year.

“In the first half, on a constant currency basis, underlying revenue was 98% of its pre-Covid level, with the second quarter marginally stronger at 99%.”

The group outlined measures to combat cost pressures, with catering firms in particular impacted by the Ukraine war, with Russia and Ukraine both major wheat producer, while ingredients costs more widely are also rising rapidly alongside fuel, energy and staff wages.

Compass has been keeping a tight lid on costs, while also overhauling its suppliers and pricing.

Chief executive Dominic Blakemore said: “Although we expect inflation to increase and continue at a heightened level in the medium term, we have a resilient business model to help mitigate this challenge.

“Inflation also provides a further impetus to outsourcing as organisations seek savings and we are capturing this growth opportunity as demonstrated by our record new business wins.”