Compass sees record growth from outsourcing

Compass Group has said it is benefitting from a strong trend towards outsourcing which led it to record net new business growth of 5.5% for the three months to 31 December 2022.

The foodservice giant said the figure was “significantly above” its historical rate of around 3%, and this area of growth in Europe was being driven by an increased focus on growth and retention, supported by investments in people, brands and processes.

In the first quarter of the year, the group’s organic revenue grew by 24%, with strong organic growth of 26% in Europe and double-digit like-for-like volume increases in all regions.

Like-for-like volumes were particularly strong in the business and industry sector as employees continued to return to the office, and in sports and leisure, where participation rates remained high.

The business added that it was working with clients to help mitigate inflationary pressures both operationally and through appropriate pricing.

Directors said the outsourcing market remains strong, with “significant” growth potential across Compass’s markets. “The increasingly complex operating environment and growing focus on sustainability and digitalisation, combined with our market-leading offering, mean we are best placed to capture these opportunities,” the company said in its trading update.

The group acknowledged that while people were returning to the office and consumer demand had been resilient, directors were “mindful” of the uncertain macroenvironment and any potential impact on discretionary spending.

“We remain positive for FY 2023 and reiterate our guidance. We expect operating profit growth above 20% on a constant currency basis, organic revenue growth of around 15%, weighted towards the first half of the year, and an underlying operating margin above 6.5%,” directors said in the report.

“Looking further ahead, we remain excited about the significant structural growth opportunities globally, leading to the potential for revenue and profit growth above historical rates, returning margin to pre-pandemic levels and rewarding shareholders with further returns.”