Compass Group’s (CPG) interim results proved something of an outlier this reporting season, in that they featured very little reference to the impact of war in Iran. By contrast, the catering giant indicated that its full-year profit growth could come in ahead of expectations.
Compass operates within defensive food segments such as healthcare, education and defence, and also has a large corporate segment. The caterer said that as more offices seek to outsource their canteen services, its business and industry arm emerged as its top performing and reported a double-digit growth rate.
The company’s steadfast focus on client retention, which sits at 96 per cent, as well as a 14 per cent rise in new business wins, meant Compass was rewarded with an 11 per cent increase in sales. Interim operating profit also rose, from $1.48bn (£1.1bn) last year to $1.6bn this time around.
As a result, the operator raised its operating profit growth guidance for 2026 from 10 per cent to “above” 11 per cent. This is set to be driven by organic revenue growth of 7 per cent, and 2 per cent growth from mergers and acquisitions (M&A).
M&A, alongside organic growth, forms a key pillar of Compass’s strategy. While the group makes over two-thirds of its sales and three-quarters of its profits in the US, the group bought Vermaat, a Dutch catering service provider, for $1.7bn last year as part of efforts to replicate its buy-and-build model in Europe.
The group also paid $270mn for German food service provider Pro Care Management, as well as $273mn for other bolt-on acquisitions and interests in joint ventures and associates. Compass spent $27mn on other payments relating to businesses acquired in previous years.
Total M&A spend therefore hit $2.3bn over the period, leaving Compass carrying more than $8bn in goodwill on its balance sheet, and net debt (including leases) of $8.6bn.
By Citi analysts’ estimates, the group’s net debt to Ebitda ratio now hovers around 1.7, although Compass’s capital allocation policy specifies a target financial leverage range of one to 1.5 times.
Regardless, strong cash generation and a solid balance sheet supported a 13 per cent boost to the interim dividend. And while the shares have come down from their 2025 highs, we remain circumspect for now given the level of execution risk that multiple acquisitions bring. Hold.
Last IC view: Hold, 2,385p, 25 Nov 2025
COMPASS (CPG) ORD PRICE:3,060¢MARKET VALUE:$52.0bnTOUCH:3,060-3,065¢12-MONTH HIGH:3,624¢LOW: 2,600¢DIVIDEND YIELD:1.67%PE RATIO:35NET ASSET VALUE:468¢*NET DEBT: $8.6bnHalf-year to 31 MarTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (¢)202422.61.2854.222.6202525.01.4762.925.5% change+11+15+16+13Ex-div:18 JunPayment:30 Jul£1 = $1.35. *includes intangible assets of $14bn, or 828¢ a share