The Compass Group logo is pictured on a smartphone in front of the stock chart shown in this illustration taken December 4, 2021. REUTERS/Dado Ruvic/Illustration
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July 26 (Reuters) – Compass ( CPG.L ), the world’s biggest food supplier, raised its forecast for revenue growth for the second time this year, on the back of new business gains and quarterly revenue that beat pre-pandemic levels, sending its shares to their highest in more than two years.
Compass, which feeds office workers, the armed forces and schoolchildren in 44 countries, also said it was wary of margin growth next year due to hot inflation.
The British company forecast its profit margin in the fourth quarter of the current financial year, which ends on September 30, to ease slightly from around 7%, although it maintained an annual margin forecast of around 6%.
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“The reality is that with inflation rates this high, it’s going to be difficult to make much margin progress,” chief financial officer Palmer Brown told analysts.
The conflict in Ukraine has pushed food and energy prices to record levels, clouding the global economic outlook and exacerbating inflationary pressures.
Compass, which also provides services for sporting events such as Wimbledon, said on Tuesday it expects full-year organic or self-generated revenue growth of around 35%, up from 30% previously forecast.
With a post-pandemic return to office work, a return to schools and packed sporting events, Compass is also seeing a rise in demand for first-time outsourcing as small businesses find it expensive to manage food at home.
Its shares were up 2.4% at 18.89 pounds by 1000 GMT, having risen to 18.98 pounds, their highest since February 2020.
The owner of food service brands such as Levy, Chartwell and Bon Appetit was hit hard by the pandemic when companies closed their businesses and had to change its menus and reduce the number of its suppliers to cope.
“We think the commentary on margin is broadly consistent with a touch worse,” Barclays analysts said.
Compass reported third-quarter underlying revenue at 109% of 2019 levels.
“The bigger picture is that the group has now left it firmly behind the pandemic,” said Steve Clayton, fund manager at Hargreaves Lansdown.
Earlier this month, rival French hospitality and food services group Sodexo ( EXHO.PA ) forecast revenue and margins to return to pre-pandemic levels in 2023. read more
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Reporting by Eva Mathews in Bengaluru; Editing by Vinay Dwivedi, David Holmes and Jane Merriman
Our Standards: The Thomson Reuters Trust Principles.
