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Compass Group has reported an encouraging start to the year following continued improvement across all sectors in its Q1 trading update for the three months ended 31 December 2021.
Group organic revenue grew by 38.6% in the first quarter, with revenues reaching 97% of their pre-Covid level. The quarterly improvement says Compass was largely driven by new business, continued strong client retention along with some ongoing recovery in the base business. The emergence of the Omicron variant had a limited impact on the Group during the period.
Performance improved across all regions with Compass reporting that four out of its five sectors are now trading above 100% of 2019 revenues. Growth was particularly strong in North America in Sports & Leisure and Education. In Europe, all sectors traded well except for Business & Industry which Compass says continues to be impacted by reopening delays. The Rest of World region continued to benefit from a higher exposure to the more resilient Defence, Offshore & Remote sector.
Future growth & outlook
In the first quarter, the Group spent c. £87 million on bolt-on acquisitions in North America, further strengthening its capabilities in delivered-in solutions. Compass says there is a strong pipeline of exciting opportunities across all regions and sectors, and it remains disciplined in its approach to acquisitions.
The acceleration in new business wins seen by the Group in FY21 have continued into the new year, with three out of the five top wins globally coming from first time outsourcing.
Looking ahead, Compass says whilst it is encouraged by the strong start to the year, excellent new business wins and continued strong client retention, it is mindful of some impact from the Omicron variant in Q2, with Business & Industry clients delaying their return to work, some Sports & Leisure events being postponed and Education facilities extending remote learning.
The Group’s guidance for FY22 remains unchanged. The business expects full year organic revenue growth of 20 – 25%, with quarterly growth rates moderating through the year, reflecting more challenging comparatives. Full year underlying operating margin is expected to be over 6%, returning to around 7% by the year end.
