Compass Group shares jumped on Tuesday after the food service group delivered organic revenue growth of 10.3% in Q3, maintaining strong performance across all regions.
Compass Group shares were 4% higher at the time of writing.
The Group’s year-to-date organic revenue growth stands at an impressive 10.9%, with North America leading at 10.6%, followed by Europe at 12.2%, and Rest of World at 9.6%.
“Food service giant Compass continues to attract new business at pace, helping to support a second upgrade to annual forecasts this year,” said Dan Coatsworth, investment analyst at AJ Bell.
“This suggests the company’s decision to ease prices in line with inflation is a good one as it helps drive loyalty among existing customers and attract new ones, bolstering an already strong market position. It also suggests a return to the office – as hybrid working policies are adjusted – is proving beneficial.
“The company and its management team see plenty more business to go after, with a large chunk of catering still done in-house.”
Investors will be pleased to see Net New Business growth accelerated in Q3, while pricing moderated in line with inflation. The company’s volumes continued to benefit from its high-quality offerings and competitive pricing compared to high street alternatives, attracting more customers to its services.
Compass Group has been actively reshaping its portfolio, replicating its successful North American model in other regions. The company’s net expenditure on mergers and acquisitions, including the purchase of CH&CO and the sale of its Brazilian business, amounted to $836 million year-to-date.
A major driver to today’s share price performance will be an upgrade to guidance. The company now anticipates underlying operating profit growth to exceed 15% on a constant-currency basis, with organic revenue growth surpassing 10%.