Compass leans into ‘strategic acquisitions’ to accelerate growth

Catering giant Compass has reiterated its commitment to acquire new businesses to accelerate growth following recent successes in Europe.

 

In its latest full-year results for the year ended 30 September 2024, the company delivered underlying operating profit growth of 16.4% and an underlying operating margin of 7.1%.

 

During the period, net M&A (mergers and acquisitions) expenditure exceeded $1b (£0.8b), which was driven by deals such as Hofmann in Germany and CH&Co in the UK.

 

Compass revealed its investment in future growth through M&A and capital expenditure amounted to 3.7% of underlying revenue.

 

This strategy, which has proven successful in North America in the past, has been particularly lucrative in Europe in recent months, with the caterer commenting: “We have increased our focus on M&A [in Europe] with significant acquisitions to deepen our sectorisation and sub-sectorisation strategy, unlock new capabilities and increase the flexibility of our operating model.”

 

Profit before tax dipped slightly from $2.1b (£1.67b) in 2023 to $2b (£1.59b) in 2024 across the group.

 

The group also refined its portfolio, having made the decision to exit five countries during the year, which included Argentina, Angola, Brazil, mainland China and the United Arab Emirates.

 

It will also exit Chile, Colombia, Mexico and Kazakhstan, subject to regulatory approval and completion procedures.

 

Dominic Blakemore, group chief executive, said: “2024 has been a year of strong operational and financial performance, with net new business growth accelerating in the second half as expected. The business continues to successfully capitalise on the dynamic market trends, using its proven competitive advantages to drive higher revenue and profit growth.

 

“To support this growth, we’re investing in capex to drive net new business and are currently prioritising strategic acquisitions to further enhance our unique sectorised approach to clients.

 

“We have a proven track record of successful M&A in North America and are using that blueprint to unlock growth in other regions. The integration of recent high-quality acquisitions in Europe is progressing well, and we’re excited by the capabilities they bring to the group.”

 

Looking to the future, he added: “In 2025, we expect high single-digit underlying operating profit growth, driven by organic revenue growth above 7.5% and ongoing margin progression. Longer term, we are confident in sustaining mid-to-high single-digit organic revenue growth with ongoing margin progression, leading to profit growth ahead of revenue growth.”