Compass Group plc (LON:CPG) has announced its full year results announcement for the year ended 30 September 2022.
| Underlying1 results 2022 | Underlying1 results 2021 | Underlying1 results Change | Statutory results 2022 | Statutory results 2021 | Statutory results Change | |
| Revenue | £25.8bn | £18.7bn2 | 37.5%3 | £25.5bn | £17.9bn | 42.5% |
| Operating profit | £1,590m | £848m2 | 87.5%2 | £1,500m | £545m | 175.2% |
| Operating margin | 6.2% | 4.5% | 170bps | 5.9% | 3.0% | 290bps |
| Earnings per share | 63.0p | 30.9p2 | 103.9%2 | 62.6p | 20.0p | 213.0% |
| Operating cash flow | £1,351m | £1,004m | 34.6% | £1,596m | £1,171m | 36.3% |
| Free cash flow | £890m | £660m | 34.8% | |||
| Annual dividend per share | 31.5p | 14.0p | 125.0% | 31.5p | 14.0p | 125.0% |
Performance highlights
• Strong organic revenue growth of 37.5%. In Q4 2022, Group was at 116% of 2019 revenues with Business & Industry at 106%
• Underlying operating margin improved by 170bps year on year to 6.2%, with H2 2022 at 6.5%
• Excellent net new business of 7.5% (5.7% rebased to 2019, above historical rate of 3%)
• Client retention rate up by 100bps year on year to a new record of 96.4%
• New business wins increased to £2.5bn4, with strong contributions from North America and Europe
• First-time outsourcing market remains buoyant, accounting for c.45% of new business wins
• Investing in the business: Capex 2.7% of underlying revenue and net M&A expenditure of £268m
• Leverage of 1.3x net debt/EBITDA, within our target range of 1x-1.5x
Strategy
• Continuing to capitalise on the significant structural growth opportunities and the acceleration of outsourcing
• Ongoing investment in our market-leading digital and ESG capabilities
• Successfully issued first sustainable bonds to help deliver climate net zero by 2050
Shareholder returns
• Annual dividend per share increased to 31.5p
• Completed initial £500m share buyback, further £250m announced today to be completed in H1 2023
2023 outlook
• Constant-currency underlying operating profit growth expected to be above 20%, delivered through:
– Organic revenue growth of around 15%, weighted towards H1 2023
– Underlying operating margin above 6.5%
Statutory results
• Statutory revenue increased by 42.5%
• Statutory operating profit up by 175.2%. The prior year included £157m of COVID-19 resizing costs
1. Reconciliation of statutory to underlying results can be found in notes 2 (segmental analysis) and 13 (non-GAAP measures) to the consolidated financial statements.
2. Measured on a constant-currency basis.
3. Organic revenue change.
4. Annual revenue of new business wins in the last 12 months.
Business review
Results presentation today
A recording of the results presentation for investors and analysts will be available on the Company’s website today, Monday 21 November 2022, at 7.00 a.m. There will be a live question and answer session at 9.00 a.m., accessible via the Company’s website, www.compass-group.com, and you will be able to participate by dialing:
| UK Toll Number: | +44 (0) 33 0551 0200 |
| UK Toll-Free Number: | 0808 109 0700 |
| US Toll Number: | +1 212 999 6659 |
| US Toll-Free Number: | 1 866 966 5335 |
| Participant PIN Code: | Compass |
Please connect to the call at least 10-15 minutes prior to the start time.
Financial calendar
| Ex-dividend date for 2022 final dividend | Thursday 19 January 2023 |
| Record date for 2022 final dividend | Friday 20 January 2023 |
| Q1 Trading Update / Annual General Meeting | Thursday 9 February 2023 |
| Last day for DRIP elections | Thursday 9 February 2023 |
| 2022 final dividend date for payment | Thursday 2 March 2023 |
| Half-year results | Wednesday 10 May 2023 |
Dominic Blakemore, Compass Group Chief Executive, said:
“The Group’s performance surpassed our expectations both in terms of net new business growth and base volume recovery, with Business & Industry now operating above its pre-pandemic revenues. The strong growth trends seen in the first half have continued, with net new business accelerating through the year in all our regions. Our clients are continuing to face operational complexities and inflationary pressures, which are driving increased outsourcing, and we are successfully capitalising on the resulting growth opportunities.
North America continues to perform strongly, and we are particularly pleased with our progress in Europe, which is benefiting from an increased focus on growth and retention, supported by investments in our people, brands, and processes.
Thanks to the hard work of our teams across the world, Compass has emerged from the pandemic as a stronger and more resilient business, reflecting our clear strategy and market-leading growth enablers. While the macroeconomic environment is uncertain, we are working in partnership with our clients to mitigate inflationary pressures and supporting our colleagues during this challenging period by offering financial support and other benefits.
For 2023, we expect underlying operating profit growth to be above 20% on a constant-currency basis, to be delivered through organic revenue growth of around 15%, weighted towards the first half of the year, and underlying operating margin above 6.5%. Having completed the previously announced share buyback of £500m, we have announced a further share buyback of up to £250m, taking the total to £750m.
Looking further ahead, we remain excited about the significant structural growth opportunities globally, leading to the potential for revenue and profit growth above historical rates, returning margin to pre-pandemic levels and rewarding shareholders with further returns.”
