Compass Group Shares Decline Despite Strong Q1 Performance

Compass Group (LON: CPG), a global food services giant, reported robust first-quarter results for the period ending December 31, 2025. Despite exceeding expectations, shares have fallen on Thursday following the report.

The company's organic revenue surged by 7.3% in Q1 2026, driven by strong performances in both North America and International markets, which each saw 7.3% and 7.1% growth respectfully.

Sports & Leisure (S&L) and Business & Industry (B&I) sectors led the charge. B&I experienced double-digit organic growth in North America, fueled by first-time outsourcing (FTO) wins and expansion within the technology sector.

New business growth remained strong, landing within the 4-5% range, supported by client retention above 96%. Moderating pricing, as anticipated in a lower inflation environment, and volume increases both contributed positively to overall growth.

Annualized new business wins reached $4 billion, a 10% year-over-year increase, with nearly half originating from FTO.

Compass Group finalized the acquisition of Vermaat, a prominent food services business in the Netherlands, for $1.7 billion in December 2025.

Including Vermaat, total first-quarter M&A investment was $1.9bn. Vermaat bolsters Compass' presence across the Netherlands, France, and Germany, bringing high-quality food offerings, retail expertise, and talent to the table.

Compass Group intends to change its LSE trading currency from GBP to USD effective April 1, 2026. This move aligns the Group's share price trading currency with its reporting currency, aiming to reduce FX volatility and simplify the investment case for global investors.

Dividends will continue to be paid in sterling unless shareholders elect to receive them in USD.

Driver Breakdown:

• Organic Growth: Strong performance across both regions and all sectors, with Sports & Leisure (S&L) and Business & Industry (B&I) remaining the fastest-growing areas.
• Net New Business: Annualized new business wins totalled $4bn, up 10% year on year, with nearly half generated from FTO.
• Vermaat Acquisition: Adds capability and talent in Europe, strengthening Compass' position across multiple sectors in the Netherlands, France, and Germany with high-quality food offers, strong retail expertise, and exceptional talent.

CEO Dominic Blakemore stated, “We have delivered a strong start to the year with broad based growth across every region and sector. The momentum in our B&I segment, particularly in North America, reflects the strength of our model and the value we continue to deliver for clients.”

Compass Group reaffirmed its 2026 guidance, expecting around 10% underlying operating profit growth (constant currency), driven by approximately 7% organic revenue growth, around 2% profit growth from M&A, and ongoing margin progression.

If current spot rates were to continue for the remainder of the year, foreign exchange translation would positively impact 2025 revenue by $630 million and operating profit by $33 million.