In This Article:
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Organic Revenue Growth: 8.5%.
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Net New Business: 4.4%, within the 4% to 5% target range.
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Client Retention Rate: Above 96%.
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Operating Profit: Increased by nearly 12% to over $1.6 billion.
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Interest Expense: Around $150 million, expected to be $300 million for the full year.
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Effective Tax Rate: 25.5%, expected to remain the same for the full year.
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Earnings Per Share: Up by nearly 11% in constant currency.
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CapEx: 3% of revenue, expected to be around 3.5% for the full year.
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Leverage: Ended the period at 1.5 times net debt to EBITDA.
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M&A Investment: $1.7 billion in CapEx and M&A, including acquisitions of Dupont in France and 4Service in Norway.
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Annualized New Signings: $3.6 billion.
Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Compass Group PLC (CMPGF) reported a double-digit increase in profit driven by 8.5% organic revenue growth and margin progress.
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The company achieved a net new business growth of 4.4%, within their target range for the fourth consecutive year.
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Client retention rate remains strong at above 96%, with 45% of new business wins coming from first-time outsourcing.
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The company has a resilient business model with a diverse sector portfolio and significant local purchasing scale.
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Compass Group PLC (CMPGF) has strong cash generation and balance sheet, allowing for significant investment in growth, including $1.7 billion in CapEx and M&A in the first half of the year.
Negative Points
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There was a noticeable slowdown in North American organic sales growth from 9.7% in Q1 to 7.5% in Q2.
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Interest expenses increased to around $150 million due to higher debt, with expectations of $300 million for the full year.
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Working capital outflow was noted, reflecting the usual seasonality and timing of events, with expectations for improvement in the second half.
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The company faces macroeconomic pressures, although it has strategies in place to mitigate these challenges.
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Despite strong performance, there is a cautious outlook with a conservative full-year guidance, reflecting potential uncertainties in the global market.
Q & A Highlights
Q: Why was there a bigger slowdown in North American sales growth compared to the international division? A: Dominic Blakemore, CEO, explained that there is no underlying weakness in North America. The slowdown was due to factors like lapping a leap year and weather-related events. The underlying trends remain consistent, and international saw a slight acceleration in net new business.