- 2024 results in line with estimates
- 2025 forecasts present no surprises
- Shares reverse initial losses
Despite a drop in earnings per share and a forecast of slower growth next year, together with no word on share buybacks, investors seem minded to give global food service group Compass (CPG) the benefit of the doubt.
After opening 102p or 3.8% lower, the shares inched their way into positive territory to trade 62p or 2.3% higher by mid-morning.
For the year to the end of September, the group reported a 10.6% increase in turnover to $42.2 billion, with net new business accounting for 4.2% of the growth, and an underlying operating margin of 7.1%, up 0.3% on the previous year.
SOLID TRADING
‘2024 has been a year of strong operational and financial performance, with net new business growth accelerating in the second half’, commented chief executive Dominic Blakemore.
‘The business continues to successfully capitalise on the dynamic market trends, using its proven competitive advantages to drive higher revenue and profit growth.’
During the year, the firm invested $1.6 billion in its existing business and a further $1 billion in bolt-on acquisitions while at the same time sharpening its focus by exiting or agreeing to exit nine non-core markets.
Although EPS (earnings per share) fell 11% on a statutory basis from 92.2 US cents to 82.3 cents, the dividend was increased by nearly 14% to 59.8 cents bringing the total capital return to shareholders to $1.5 billion.
For the year to September 2025, the company said it expected high single-digit growth in operating profit, following double-digit growth in the year just ended, driven by organic revenue growth above 7.5%, along with ‘ongoing’ margin progression.
EXPERT VIEWS
Greg Johnson at Shore Capital called the 2024 results ‘robust and bang in line’ and described the outlook for 2025 as ‘confident and consistent with our existing assumptions’, while cautioning that the lack of a further share buyback might disappoint sone investors given the strength of the firm’s balance sheet.
Anna Barnfather at Panmure Liberum concurred the results were in line, adding there were unlikely to be material changes to forecasts on the basis of the 2025 organic growth and margin targets, while in valuation terms the shares are already trading in the upper half of their historic range on a PE (price to earnings) ratio of 24 times.
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