Compass Group has announced its trading results for the third quarter ended 30 June 2023, which detail strong organic growth of 15%, despite lapping the reopening of all sectors in the prior year.
Year-to-date organic revenue growth was 21%, benefiting from excellent client retention of 96.7% and balanced net new business grew by 5%.
|Organic revenue growth
|Q3 YTD 2023
|Rest of World
Compass also reported that outsourcing trends remain strong and are contributing to an exciting pipeline of new business opportunities across all of the Group’s regions. It added that whilst inflation remains elevated, it is making margin progress by mitigating cost pressures, pricing appropriately and benefiting from operational leverage.
Acquisitions and disposals
Compass is continuing to focus on bolt-on acquisitions that support its capabilities and further strengthen the company’s competitive advantage. Year-to-date, the Group’s net expenditure on acquisitions and disposals was £272 million.
Share buyback programme
Compass has purchased £250 million of the £750 million share buyback programme announced at its HY results in May 2023, the remainder of which will complete by the date of the Group’s full year results. Since May 2022, Compass has announced a cumulative share buyback of £1.5 billion.
Trading results from Compass’ overseas operations are translated at the average exchange rates for the period. Compass states if these currency movements continue for the remainder of the year, foreign exchange translation would positively impact FY 2022 revenue by £593 million and operating profit by £43 million.
Full Year 2023 guidance remains unchanged. Compass continues to expect operating profit growth towards 30% on a constant-currency basis, to be delivered through organic revenue growth of around 18% and an underlying operating margin in the range of 6.7% to 6.8%.
Longer term, the Group says it expects the growth opportunities to sustain mid-to-high single-digit organic growth and a path back to its historical margin, leading to profit growth above revenue growth.