Compass Group (CPG) H2 2025 earnings summary

Executive summary

• Achieved strong organic growth and margin progress in FY2025, with profit up 11.7% year-over-year and free cash flow reaching $2 billion for the first time.

• Net new business growth was 4.5%, within the 4-5% target range for the fourth consecutive year, supported by client retention above 96%.

• Addressable market for food services is estimated at $360 billion, with less than 15% market share, and further growth opportunities in support services worth at least $800 billion.

• Free cash flow increased by 13.5% to $2.0bn, with an excellent conversion rate of 88%.

Financial highlights

• FY25 revenue rose to $46.1bn from $42.2bn in FY24, with organic revenue growth of 8.7% and Q4 particularly strong due to increased catering and hospitality events.

• Operating profit increased to $3,335m (up from $2,998m), margin improved to 7.2%, and EPS grew 11.1% to 131.9 cents.

• Free cash flow conversion improved to 88%; CapEx was 3.3% of revenue, expected to be around 3.5% in FY2026.

• Net debt to EBITDA stood at 1.4x; interest expense was $315 million, expected to rise to $350 million in FY2026 due to acquisitions.

• ROCE was 18.2% (North America: 26.1%, International: 15.5%).

Outlook and guidance

• FY2026 guidance: operating profit growth of around 10% (constant currency), driven by ~7% organic revenue growth, ~2% profit growth from M&A, and ongoing margin improvement.

• Margin progress expected in both North America and international, with incremental gains from productivity and technology investments.

• Leverage expected to temporarily exceed target range in 2026 due to acquisitions, with deleveraging anticipated in 2027.

• Capex expected at ~3.5% of revenue.