Compass Launches Fresh Share Buyback, Lifts Dividend Despite Missing Market Views -- Update

By Michael Susin

Compass Group lifted its dividend payout and announced a further share buyback despite a weaker-than-expected rise in pretax profit for fiscal 2023.

The U.K. catering contractor said Monday that it was launching a further share buyback of up to $500 million to complete in 2024, subject to merger and acquisition activity. The return to shareholders follows a 750 million-pound ($934.6 million) share buyback completed this month.

The board raised the dividend payout to 43.1 pence a share from 31.5 pence.

Compass reported pretax profit of GBP1.75 billion for the year ended Sept. 30 compared with GBP1.47 billion a year earlier. This compares with a consensus forecast of GBP1.84 billion taken from FactSet and based on nine analysts' estimates.

Revenue rose to GBP31.03 billion from GBP25.5 billion, reflecting a robust trading performance and favorable exchange rates. However, it missed a company-provided market estimate of GBP31.2 billion.

Underlying operating profit--which strips out exceptional and other one-off items--came in at GBP2.12 billion from GBP1.59 billion while the underlying margin was 6.8% compared with 6.2%, both in line with the company-compiled market estimate.

Looking ahead, Compass expects underlying operating profit growth toward 13% for fiscal 2024, delivered through high single-digit organic revenue growth and margin progression.

"The business is in great shape operationally and financially and well positioned for a more focused growth phase. Despite some macroeconomic uncertainty, favorable 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," Chief Executive Dominic Blakemore said.

Write to Michael Susin at [e-mail]

(END) Dow Jones Newswires

November 20, 2023 03:15 ET (08:15 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.