EXTRA: Compass profit guidance raise offsets new business growth dip
11 maj, 14:10
(Alliance News) - A slower pace of new business growth took some of the gloss off strong half-year results from Compass Group PLC on Monday, but analysts nonetheless remain positive on what one called a "high-quality compounder."
Shares in the Chertsey, England-based contract caterer rose 2.1% to USD30.11 each in London on Monday afternoon.
The FTSE 100 listing said pretax profit in the half-year to March 31 rose 15% to USD1.47 billion from USD1.28 billion. Underlying operating profit shot up 12% to USD1.84 billion from USD1.65 billion.
Revenue improved 11% to USD24.98 billion from USD22.57 billion a year prior, with organic growth of 7.2%, benefiting from strong client retention at 96%.
UBS pointed out revenue was 0.5% ahead of Visible Alpha consensus of USD24.86 billion, underlying operating profit was 1% above consensus of USD1.82 billion with organic revenue growth stronger than 7.0% consensus.
"We've delivered a strong first-half performance, with underlying operating profit up 12%, enabling us to increase our full-year profit guidance. We have great momentum across the business, driven by excellent new business wins, high levels of client retention and margin progression in both regions," Chief Executive Dominic Blakemore said.
Compass highlighted new business wins of USD4.1 billion, up 14% increase year on year, with half from first-time outsourcing.
Net new business growth was 3.8% in the first half, slowing from 4.2% over the last 12 months, with an expected acceleration in the financial second half.
Bank of America noted the weakness in net new business was impacted by weather in its second quarter "as the company had previously warned".
BofA thinks a step-up in the second half of the financial year is "achievable" and the broker estimates net new business will likely to rise to above 4.2% to 4.3%, which would keep financial 2026 within the usual 4% to 5% range.
"We believe the 2H acceleration story is credible and see 3Q reporting as a key catalyst to prove net new growth is intact," BofA added.
Russ Mould, investment director at AJ Bell, said Compass is benefiting from a long-term shift from businesses and other large organisations doing their catering in-house to having third parties do the job.
In addition, Compass' scale allows it to achieve "significant operational efficiencies and strike attractive deals with suppliers, and this is reflected in profit growing faster than revenue," Mould added.
"This lends encouragement to the view that Compass can deal with any inflationary pressures associated with the Iran war and resulting energy price shock," he continued.
Looking ahead, Compass now expects underlying operating profit growth of "above 11%" for the full-year, its guidance raised from "around 10%".
Compass said it will be "driven by organic revenue growth of around 7%, around 2% profit growth from M&A and ongoing margin progression".
"Longer term, we remain confident in sustaining mid-to-high single-digit organic revenue growth, ongoing margin progression and profit growth ahead of revenue growth," the company said.
Underlying operating profit in the prior year was USD3.34 billion.
Compass raised its interim dividend by 13% to 25.5 cents per share from 22.6 cents.
UBS, which retained a 'buy' rating, saw the results as a "modest positive".
"The lower pace of new business growth in the half was largely expected and we think the continued traction on profitability and the upgrade to operating profit guidance should more than offset any perceived short-term weakness," the Swiss bank said.
BofA, which reiterated a 'buy' rating, said: "With organic growth intact and durable margin progression, and M&A likely coming down in FY27E onwards, Compass remains a high-quality compounder with scope for further upgrades and potential buyback flexibility later at FY26 results."
JPMorgan, which retained an 'overweight' rating, said it was a "supportive" print but suggested the market may focus on the "softer Q2 net new outcome," which is likely to slightly "overshadow" the results.
RBC Capital Markets, which kept an 'overweight' rating thinks the recent de-rating of Compass stock represents a "good entry point" for the longer term and see "concerns over consumer pressures, derivative AI disruption risks and threats from GLP-1s to be overdone."
By Jeremy Cutler, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2026 Alliance News Ltd. All Rights Reserved.
EXTRA: Compass profit guidance raise offsets new business growth dip
11 maj, 14:10
(Alliance News) - A slower pace of new business growth took some of the gloss off strong half-year results from Compass Group PLC on Monday, but analysts nonetheless remain positive on what one called a "high-quality compounder."
Shares in the Chertsey, England-based contract caterer rose 2.1% to USD30.11 each in London on Monday afternoon.
The FTSE 100 listing said pretax profit in the half-year to March 31 rose 15% to USD1.47 billion from USD1.28 billion. Underlying operating profit shot up 12% to USD1.84 billion from USD1.65 billion.
Revenue improved 11% to USD24.98 billion from USD22.57 billion a year prior, with organic growth of 7.2%, benefiting from strong client retention at 96%.
UBS pointed out revenue was 0.5% ahead of Visible Alpha consensus of USD24.86 billion, underlying operating profit was 1% above consensus of USD1.82 billion with organic revenue growth stronger than 7.0% consensus.
"We've delivered a strong first-half performance, with underlying operating profit up 12%, enabling us to increase our full-year profit guidance. We have great momentum across the business, driven by excellent new business wins, high levels of client retention and margin progression in both regions," Chief Executive Dominic Blakemore said.
Compass highlighted new business wins of USD4.1 billion, up 14% increase year on year, with half from first-time outsourcing.
Net new business growth was 3.8% in the first half, slowing from 4.2% over the last 12 months, with an expected acceleration in the financial second half.
Bank of America noted the weakness in net new business was impacted by weather in its second quarter "as the company had previously warned".
BofA thinks a step-up in the second half of the financial year is "achievable" and the broker estimates net new business will likely to rise to above 4.2% to 4.3%, which would keep financial 2026 within the usual 4% to 5% range.
"We believe the 2H acceleration story is credible and see 3Q reporting as a key catalyst to prove net new growth is intact," BofA added.
Russ Mould, investment director at AJ Bell, said Compass is benefiting from a long-term shift from businesses and other large organisations doing their catering in-house to having third parties do the job.
In addition, Compass' scale allows it to achieve "significant operational efficiencies and strike attractive deals with suppliers, and this is reflected in profit growing faster than revenue," Mould added.
"This lends encouragement to the view that Compass can deal with any inflationary pressures associated with the Iran war and resulting energy price shock," he continued.
Looking ahead, Compass now expects underlying operating profit growth of "above 11%" for the full-year, its guidance raised from "around 10%".
Compass said it will be "driven by organic revenue growth of around 7%, around 2% profit growth from M&A and ongoing margin progression".
"Longer term, we remain confident in sustaining mid-to-high single-digit organic revenue growth, ongoing margin progression and profit growth ahead of revenue growth," the company said.
Underlying operating profit in the prior year was USD3.34 billion.
Compass raised its interim dividend by 13% to 25.5 cents per share from 22.6 cents.
UBS, which retained a 'buy' rating, saw the results as a "modest positive".
"The lower pace of new business growth in the half was largely expected and we think the continued traction on profitability and the upgrade to operating profit guidance should more than offset any perceived short-term weakness," the Swiss bank said.
BofA, which reiterated a 'buy' rating, said: "With organic growth intact and durable margin progression, and M&A likely coming down in FY27E onwards, Compass remains a high-quality compounder with scope for further upgrades and potential buyback flexibility later at FY26 results."
JPMorgan, which retained an 'overweight' rating, said it was a "supportive" print but suggested the market may focus on the "softer Q2 net new outcome," which is likely to slightly "overshadow" the results.
RBC Capital Markets, which kept an 'overweight' rating thinks the recent de-rating of Compass stock represents a "good entry point" for the longer term and see "concerns over consumer pressures, derivative AI disruption risks and threats from GLP-1s to be overdone."
By Jeremy Cutler, Alliance News reporter
Comments and questions to newsroom@alliancenews.com
Copyright 2026 Alliance News Ltd. All Rights Reserved.
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