This statement updates investors on Compass Group PLC’s performance for the three months ended 31 December 2022 and is being issued ahead of the Company’s Annual General Meeting. The AGM will be held at 12 noon today at Twickenham RFU Stadium.
In the first quarter of the year, the Group’s organic revenue grew by 24%. We continued to benefit from strong outsourcing trends with net new business growth of 5.5%, significantly above our historical rate of around 3%, and in line with FY 20221.
Like for like volumes were particularly strong in Business & Industry, as employees continued to return to the office, and in Sports & Leisure, where participation rates remained high. Whilst inflation remained elevated, we continued to work closely with our clients to help mitigate this pressure both operationally and through appropriate pricing.
All regions performed strongly in the quarter, with organic growth of 23% in North America, 26% in Europe and 27% in Rest of World. Growth drivers across all markets were similar, with net new business growth of 5 – 6%, and double-digit like for like volume increases in all regions.
We are particularly pleased with the continued strong net new business performance in Europe which is benefiting from the increased focus on growth and retention, supported by investments in people, brands and processes.
In the first quarter, the Group’s net expenditure on bolt-on acquisitions was £55 million, further strengthening our portfolio of brands, and our digital and procurement capabilities. There is a strong pipeline of exciting opportunities across all regions and sectors, and we remain focused and disciplined in our approach to acquisitions.
As at 7 February 2023, we had completed £163m of the £250m share buyback programme which was announced at our FY results in November 2022.
Trading results from our overseas operations are translated at the average exchange rates for the period. If these currency movements2 continue for the remainder of the year, foreign exchange translation would positively impact FY 2022 revenue by £1,314 million and operating profit by £94 million3.
The outsourcing market remains strong, and we are excited about the significant growth potential across our 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.
While populations continued to return to the office and consumer demand has been resilient, we are 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%.
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.
1 Net new business in FY 2022 rebased to 2019 revenues was 5.7%.
2 Based on closing rates as at 7 February 2023.
3 For H1 2022 FX translation is a positive impact of £1,074 million on revenue and £75 million on operating profit.
|Payment date for 2022 final dividend||2 March 2023|
|Half year results||10 May 2023|
|Q3 trading update||25 July 2023|
|Full year results||20 November 2023|
|Investors||Agatha Donnelly, Helen Javanshiri & Simon Bielecki||+44 1932 573 000|
|Press||Giles Robinson, Compass Group PLC||+44 1932 963 486|
|Tim Danaher, Brunswick||+44 207 404 5959|