Compass Group (CPG) H2 2024 earnings summary

Executive summary

• Operating profit rose 16.4% year-over-year, with organic revenue growth of 11% and margin improvement to 7.1%.

• Double-digit growth achieved across organic revenue, operating profit, EPS, and free cash flow.

• Portfolio quality improved by exiting non-core markets and investing in core capabilities, CapEx, and M&A.

• Four significant platform acquisitions in Europe and US Canteen vending to enhance subsector business model and scale in core countries.

• Strong cash generation and disciplined capital allocation supported investments, shareholder returns, and a robust balance sheet.

Financial highlights

• Group operating profit increased by 16% to $3 billion, with margin up to 7.1%.

• EPS up 15% year-over-year; dividend per share rose to 59.8c.

• Free cash flow grew 15% to $1.74bn, with an 85% conversion rate.

• CapEx was 3.7% of revenue, with a plan to normalize to 3.5% going forward.

• Net new business was 4.2% for the year, accelerating to 4.8% in the second half.

Outlook and guidance

• FY25 organic revenue growth expected above 7.5%, with high single-digit operating profit growth and ongoing margin improvement.

• Net new business anticipated in the 4%-5% range, with pricing of 2%-3% depending on inflation.

• Capex guidance at c.3.5% of revenue; interest charge c.$300m; effective tax rate c.25.5%.

• Net M&A impact in FY25 expected to reduce operating profit by $30m but be accretive from FY26.

• Growth expected to be first-half weighted in 2025, with some moderation in pricing and inflation.