FMJ Facilities Management magazine providing industry-specific intelligence to FM and property professionals
The Group has reported another strong year of financial performance in its Full Year results for the year ended 30 September 2023.
Globally, the food and support services provider continues to perform strongly both in terms of underlying revenue growth, which increased 18.8% to £31.3bn (2022:£26.4bn), and underlying operating margin, which improved by 60bps to 6.8%. As a result, underlying operating profit grew by 29.6% to £2,122m (2022: £1,637m). Statutory profit before tax grew from £1.47bn (2022) to £1.75bn (2023).
The Group also reports it has signed £2.7bn of new business, with first-time outsourcing accounting for c.50%, mobilised net new business of 4.6%, and held a strong client retention rate of 96.5%.
Across its European division, underlying operating profit was £392m, representing a growth of 31.5%, driven by high levels of revenue growth and strong margin progression, supported by Compass’ investment in growth initiatives and core processes across the region.
Organic revenue growth of 21.6% was driven by acquisitions most notably, in Business & Industry, Education and Sports & Leisure. Client retention rates improved by a further 70bps to 96.0%. Statutory revenue increased by 19.5% to £6,804m.
Growth was strong in all major markets, most notably in the UK, Germany and Turkey, which Compass says all made a significant contribution to the region.
As part of the Group’s ongoing strategic portfolio review, Compass exited five businesses in Central and Eastern Europe (Czech Republic, Hungary, Slovakia, Romania and Estonia) to focus resources and investment on core operations.
Dominic Blakemore, Group Chief Executive, said: “2023 was a strong year for Compass. North America continued its long track record of excellent growth whilst Europe delivered a second year of net new growth in the 4-5% range. During the year, we continued to successfully capitalise on the dynamic outsourcing trends, resulting in another record year of new business wins and continued strong client retention.
“We have a strong, balanced, and sustainable growth model across the Group. Our size, strength and scale enable us to continue investing in our operating model, further enhancing our competitive advantages. We have exited nine tail countries to focus on markets with the greatest growth opportunities and our strong cash generation continues to fuel investment in our business through capex and attractive M&A.
“The business is in great shape operationally and financially and well positioned for a more focused growth phase.
“Despite some macroeconomic uncertainty, favourable market dynamics continue and, with a global market share of less than 15% and around 50% of the market still self-operated, we have an exciting structural growth opportunity. We are confident that the focus on our core markets, the ongoing investment in our market-leading offer and our proven processes will support high single-digit organic revenue growth in 2024.
“Going forward, we expect to sustain mid to high single-digit organic revenue growth and ongoing margin progression leading to profit growth ahead of revenue growth and increased cash generation. We are investing in capex and strategic M&A to support future growth, returning any surplus cash through the share buyback programme, and delivering long-term, compounding shareholder returns.”
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