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North America accounted for 67% of Compass Group’s 2023 revenues | Photo credit: via Shutterstock
Compass Group has posted positive first quarter trading in North America and Europe, boosted by a strong workplace catering channel and acquisitions, but has announced it will cease operating in China.
Reporting on the three months ending 31 December 2023, Compass Group achieved 11.7% year-on-year group revenue growth, with like-for-like sales particularly strong in its Business & Industry workplace catering division, which accounts for a third of total revenues.
The contract catering and foodservice company uses its own brand Peak St. and Crackle & Hum coffee ranges across most of its UK sites and partners with coffee roasters, including BLK & Bold, in the US.
The contract catering and foodservice group currently operates across 35 markets globally, with North America accounting for 67% of its revenues in 2023, followed by Europe (23%) and Rest of the World (10%). Revenue growth in the first quarter was highest in Europe at 13%.
In a press release, Compass Group said acquiring new businesses and reshaping its portfolio would drive further growth across its core markets.
Net acquisition expenditure in the first quarter was $352m, primarily due to the completed purchase of German cooked and frozen meal manufacturer and supplier HOFMANNs. In January 2024, Compass Group agreed to acquire premium contract caterer and hospitality services group CH&CO for £475m ($600m).
Compass Group also provides catering services across approximately 200 corporate, education and elderly care facilities in China. The UK catering group did not elaborate on its planned exit from the market but is likely to have come under sustained pressure from the pandemic, having amassed £4.9bn ($6.1bn) debt in 2020.
“We’ve had a strong start to the year with sustained balanced growth across all regions. Outsourcing trends and volumes were strong despite continued inflationary pressures and some macroeconomic uncertainty. The Group’s good cash generation and balance sheet gives us the flexibility to invest in capex, driving organic growth, and acquire high quality businesses, unlocking further growth and enhancing shareholder returns,” said Dominic Blakemore, Group CEO, Compass Group.
Compass Group’s full-year 2023 sales reached £31.3bn ($39bn), while operating profit increased 30% to £2.1bn ($2.6bn) in the 12 months to 30 September 2023. The business forecasts high single-digit organic revenue growth and underlying operating profit growth of 13% this year.
