Compass Group profits boosted by return to offices and live events

Contract caterer Compass Group has revealed a surge in profits boosted by a rebound in live events and workers returning to the office.

The company has upgraded its 2023 outlook to predict a 30% growth in operating profit for the year, up from a prior forecast of 20%.

Global operating profit at the world's biggest contract catering company exceeded £1b for the six months ending 31 March, with revenue rising 24.7% amid a 5.2% rise in net new business wins.

Off the back of the results, the company announced a £750m share buyback would be completed by the end of the year.

Underlying operating profit in Europe rose by 55.1%, with figures jumping from £125m to £197m.

Compass said its business and industry and sports and leisure sectors attracted the highest proportion of new clients as employees returned to the office and live event venues drew bigger crowds.

Operating profit margins in Europe also increased by 110bps to 5.6% from 4.5% as volumes recovered.

Meanwhile, the company spent £210m on mergers and acquisitions, most of which went towards bolt-on acquisitions in the US and UK.

However, the group also incurred a charge of £99m as a result of its strategic portfolio review, which included the sale of a business, site closures and contract terminations in the UK.

Dominic Blakemore, group chief executive at Compass, said: "The group performed strongly in the first half of the year, benefiting from balanced growth across all regions. Net new business continued to be excellent, and significantly higher than our historical rate. We are particularly pleased with the step change in our Europe performance which has benefited from growth initiatives as well as favourable outsourcing conditions.

"In addition to our ordinary dividend, we are announcing a further share buyback of up to £750m in 2023, taking the total programme announced since May 2022 to £1.5b."

Compass said it had tackled rising inflation through pricing and operational efficiencies and expected to face further challenges due to growing client demand.

It added that it will continue to invest in digital products as well as environmental, social and governance policy as these were "clear growth enablers" in the market.