Corporate catering and convenience services behemoth Compass Group PLC had an encouraging start to the year, reporting continued improvement across all sectors
Compass Group's organic revenue grew by 38.6% in its first quarter, ended Dec. 31, with revenues reaching 97% of their pre-COVID level. The quarterly improvement was largely driven by new business, continued client retention and ongoing recovery in the base of Compass's business. The company said the emergence of the omicron variant had a limited impact on its businesses during the quarter.
Compass said its performance improved across all regions with four out of five sectors now trading above 100% of 2019 revenues. Growth was particularly strong in North America's sports and leisure and education sectors. Compass is parent to Canteen Vending Services in the U.S.
In Europe, all sectors traded well except for business and industry, which continues to be impacted by reopening delays. The "rest of world" region continued to benefit from a higher exposure to the more resilient defense, offshore and remote sector.
In the first quarter, the group spent about £87 million on bolt-on acquisitions in North America, further strengthening its capabilities in delivered-in solutions. "There is a strong pipeline of exciting opportunities across all regions and sectors, and we remain disciplined in our approach to acquisitions," the company said.
The acceleration in new business wins seen in FY21 continued into the new year, with three out of the five top wins globally reportedly coming from first time outsourcing.
Summary and outlook
Compass said it is encouraged by the strong start to the year, excellent new business wins and continued strong client retention. However, it is mindful of some impact from the omicron variant in the second quarter, with B&I clients delaying their return to work, some sports and leisure events being postponed, and education facilities extending remote learning.
Its guidance for fiscal 2022 remains unchanged. Full-year organic revenue growth is expected to be between 20% and 25%, with quarterly growth rates moderating through the year, reflecting more challenging comparatives. Full0year underlying operating margin is expected to be over 6%, returning to around 7% by the year end.
Compass will release its half-year results on May 11.