26th Nov 2024 09:57
(Alliance News) - Compass Group PLC on Tuesday said strong revenue growth and operational improvements were offset in its recent financial year by rising finance costs and charges related to business closures, reflecting the company's efforts to streamline its portfolio and focus on long-term expansion.
The Chertsey, England-based contract caterer reported a 3.8% decline in pretax profit for the year that ended September 30, as higher finance costs and business closure losses weighed on earnings. Pretax profit fell to USD2.01 billion from USD2.14 billion the previous year.
Revenue rose 11% to USD42.0 billion from USD37.91 billion in 2023, driven by strong demand across the company's core markets and a 4.2% increase in net new business. Organic revenue growth reached 11%, exceeding the company's forecast of 10%.
The decline in profit was attributed to a 63% surge in finance costs to USD325 million and a USD203 million net loss on the sale and closure of businesses, swung from a similar USD24 million gain the prior year.
Nevertheless, Compass highlighted that it achieved a 30-basis-point improvement in its operating margin to 7.1% and a 16% increase in underlying operating profit to USD2.99 billion from USD2.02 billion.
Compass raised its annual dividend by 14% to 59.8 cents per share from 52.6 cents in 2023, including a final dividend of 39.1 cents, up from 34.7 cents. It also has returned a total of USD1.5 billion to shareholders through dividends and buybacks, so far completing USD476 million of its current USD500 million share repurchase programme.
Chief Executive Dominic Blakemore said: "2024 has been a year of strong operational and financial performance, with net new business growth accelerating in the second half as expected. The business continues to successfully capitalise on the dynamic market trends, using its proven competitive advantages to drive higher revenue and profit growth."
Looking ahead, Compass expects high single-digit underlying operating profit growth in 2025, supported by organic revenue growth above 7.5% and further margin improvement.
The company highlighted that its strategic moves, including USD2.6 billion in acquisitions and infrastructure investments, as well as its exit from nine non-core markets, have positioned it for sustainable long-term expansion.
Shares in Compass were down 0.6% at 2,638.00 in London on Tuesday morning.
By Eva Castanedo, Alliance News reporter
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