Compass Group Share Price Rallied 4.17% on Upbeat Q1 Results

The Compass Group plc (LON: CPG) share price rallied 4.17% after releasing its Q1 trading update for the quarter ended 31 December 2023. The leading company in the food service industry released its Q1 results ahead of its Annual General Meeting scheduled for today at noon, taking place at the Twickenham RFU Stadium.

Compass Group observed an 11.7% surge in organic revenue during the quarter, witnessing robust expansion across all geographical areas. The company experienced a notably higher volume growth than expected, particularly in the Business & Industry sector, while growth from other sectors aligned with forecasts made during the annual results announcement.

Compass Group has been actively acquiring promising new enterprises and fine-tuning its business portfolio in its pursuit of capitalising on substantial structural growth opportunities within its key markets. The first quarter saw net acquisitions totalling $352 million, a significant portion of which was allocated to acquiring HOFMANNs in Germany. 

Furthermore, in January 2024, Compass Group finalised an agreement to acquire CH&CO in the UK for an initial value of approximately $600 million. This acquisition is notable for its annual revenues of nearly $570 million and marks the company's strategic decision to divest its smaller operations in China.

Additionally, on January 30, 2024, Compass Group announced the issuance of a €750 million sustainable bond set to mature in February 2031. This bond issuance aims to refinance the €750 million bond due in July 2024. 

As of February 7, 2024, Compass Group successfully executed approximately $100 million of its $500 million share buyback program, initially revealed during the November 2023 full-year results announcement. 

Dominic Blakemore, Compass Group Chief Executive, said: “We've had a strong start to the year with sustained balanced growth across all regions. Outsourcing trends and volumes were strong despite continued inflationary pressures and some macroeconomic uncertainty. The Group's good cash generation and balance sheet gives us the flexibility to invest in capex, driving organic growth, and acquire high quality businesses, unlocking further growth and enhancing shareholder returns. Our 2024 guidance remains unchanged. Underlying operating profit growth is expected to be towards 13%3 delivered through high single-digit organic revenue growth and ongoing margin progression.”

Compass Group share price. 

The Compass Group share price rallied 4.17% to trade at 2234.0p from Wednesday’s closing price of 2144.5p.