Jump in outsourcing food services boosts Compass profits

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Higher cost to business offset by many new contracts

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A wave of outsourcing by cash-strapped companies has buoyed the results of catering group Compass, which saw a 175.2% jump in profits last year to £1.5 billion.

The company’s latest set of results also showed statutory revenue climbed 42.5% in the year to 30 September to £25.5bn, as it made up for losses during the Covid pandemic and beat market expectations.

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Like many companies, Compass has been hit by the rising cost of food and labor and by changing ingredients such as switching from sunflower oil to rapeseed oil in the UK, and reducing the number of options offered by its menu. Dealing with inflation.

But in addition to increasing Compass’ own costs, the challenging economic environment and recession fears have also forced more companies to outsource their canteen needs, allowing Compass to gain more new business and retain customers. Got help.

CEO Dominic Blakemore said last year’s performance had “exceeded our expectations both in terms of net new business growth and base volume recovery”.

The company, which serves office workers, university students, patients in hospitals and older people in care homes in 40 countries, has emerged from the pandemic as a “stronger and more resilient business”.

He added: “Our clients are facing increased operational complexities and inflationary pressures that are driving increased outsourcing, and we are successfully capitalizing on the resulting growth opportunities.”

However, shares of the company fell more than 3% in early trading Monday morning on the prospect of slower growth in the current year.

Compass said its underlying operating profit growth will top 20% for 2023, which will be delivered through organic revenue growth.

It also announced a £250 million share buyback on Monday, adding to a previous £500 million program launched in May, and more than doubled its dividend to 31.5p for the year.

Blakemore added, “Looking ahead, we are bullish about the significant structural growth opportunities globally, leading to the potential for revenue and profit growth above historical rates, with margins returning to pre-pandemic levels.” returns and further returns to shareholders.”

Credit: www.standard.co.uk /

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