Compass Group (CPG) Q3 2024 TU earnings summary

Executive summary

• Delivered another strong quarter with robust performance across all regions and sectors, supported by acceleration in net new business and improved retention above 96%.

• Achieved organic revenue growth of 10.3% in Q3 2024, with strong performance across all regions.

• Upgraded full-year guidance due to stronger-than-expected top-line performance, with underlying operating profit growth now expected above 15% and organic revenue growth above 10%.

• Positive industry trends and a strong pipeline of new business opportunities underpin continued organic and M&A-driven growth.

Financial highlights

• Organic revenue growth for Q3 2024 was 10.3% year-on-year; year-to-date growth at 10.9%.

• Volume growth held steady at approximately 2% for the quarter, with positive trends in all regions and sectors.

• Retention rates improved to above 96% overall, with Europe above 95% and other regions above 96%.

• Gross new business reached $3.5 billion, $100 million higher than the last twelve months at the end of H1.

• Pricing moderated to around 4% in Q3 from 5% in H1, reflecting easing inflation.

• Foreign exchange translation projected to negatively impact 2023 revenue by $106m and operating profit by $17m if current rates persist.

Outlook and guidance

• Full-year underlying operating profit growth expected above 15%, driven by organic revenue growth above 10%.

• Guidance for next year is mid- to high-single-digit organic growth, with expectations to be in the middle of that range.

• Anticipates 2%-3% price growth for next year, with higher levels in H1 and further moderation in H2 as inflation trends down.

• Retention rates expected to remain above 96%, with ongoing focus on both key accounts and smaller business segments.

• Margin progression to continue, with no impediment to reaching or exceeding historic margin levels.