Global catering group Compass said more people had returned to offices than it had expected allowing it to raise its revenue guidance and outline a £500mn share buyback programme.
Chief executive Dominic Blakemore said on Wednesday that the average number of days workers were spending in offices was around 3.2 a week compared with 4.2 before Covid and that while he did not expect office attendance to return to 2019 levels, “it won’t be the catastrophe people thought it would be”.
The FTSE 100 company, which is the world’s largest caterer, expects revenue growth of around 30 per cent this year, from an earlier range of 20 to 25 per cent, thanks to the reopening of offices and schools and the return of large sports events.
It has also benefited from increased demand from hospitals and clinics, which are still very busy because of the pandemic, and from workplaces trying to tempt employees back by offering free food.
The group also said that it had achieved its highest ever number of new contracts with first-time clients, as businesses and institutions turned to large companies with more buying power to counter rising prices.
The total value of the new contracts in the 12 months to March 31 was £2.5bn. Overall revenues in the 6 months to the end of March were £11.5bn, up 36.3 per cent compared with the same period in 2021 and 6 per cent below the equivalent figure in 2019.
Pre-tax profits were £632mn, up 375 per cent on last year.
It is a sign of a return to normality for the group, which was badly hit by the pandemic with the widespread closure of workplaces and cancellation of large events. In May 2020, it undertook a £2bn rights issue — one of the largest fundraisings by a listed UK company during Covid.
Blakemore said that the group was mindful that the recovery would not be easy, with widespread inflation affecting energy, food and payroll costs — a result of supply chain disruption during Covid and the war in Ukraine — putting margins under pressure.
Cost inflation is currently 7 per cent for the group and Blakemore said he expected it to reach low double digit figures in the first half of next year.
Compass is cutting the amount of red meat it provides to clients, using cheaper white meats such as turkey, and substituting some of the protein in burgers for ingredients like mushrooms, in an effort to counter price rises.
Analysts at Barclays said that the group, which operates in 44 countries and says it serves 5.5bn meals a year, was “particularly attractive in light of the macro uncertainties today with limited revenue risks in a recession relative to most of the sector”.
Compass shares gained nearly 10 per cent in early London trading on Wednesday, reversing its declines for the year.
Source: Economy - ft.com
