In This Article:
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Operating Profit: Increased by 16% to $3 billion.
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Organic Revenue Growth: 11% increase.
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Margin Progression: Improved by 30 basis points to 7.1%.
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Net New Business: 4.2%, accelerating to 4.8% in the second half.
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Interest Expense: Increased to $249 million, expected to be around $300 million in fiscal year 2025.
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Effective Tax Rate: 25.5%.
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Earnings Per Share (EPS): Increased by 15%.
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Dividends: Grew by 15% in line with EPS.
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CapEx: 3.7% of revenue, expected to be around 3.5% going forward.
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Working Capital Inflow: Approximately $200 million.
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Net M&A Expenditure: $1 billion.
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Shareholder Returns: $1.5 billion through dividends and buybacks.
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Leverage: Ended the year at 1.3 times net debt to EBITDA.
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Guidance for 2025: High single-digit operating profit growth, organic growth above 7.5%.
Release Date: November 26, 2024
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 16% increase in operating profit and 11% organic revenue growth, with margin progression to 7.1%.
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The company has exited noncore markets and continues to invest in capabilities, CapEx, and M&A to sustain higher net new business growth.
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Net new business growth accelerated to 4.8% in the second half, providing strong momentum into 2025.
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The company has a robust sales pipeline and strong retention, expecting net new business to continue in the 4% to 5% range.
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Compass Group PLC (CMPGF) is investing in high-quality acquisitions in Europe, such as Dupont Restauration in France and 4Service in Norway, to expand its portfolio and drive growth.
Negative Points
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Interest expenses increased to $249 million due to higher interest rates and debt, with expectations to rise to $300 million in fiscal year 2025.
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Volume growth moderated to around 2%, and pricing trended lower as the year progressed.
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The net impact of announced acquisition disposals is expected to reduce profit in fiscal year 2025 by around $30 million.
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The company faces operational complexities due to allergens, dietary requirements, and sustainability initiatives.
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There is uncertainty around volume growth, which is economically sensitive and difficult to predict.
Q & A Highlights
Q: Could you provide insights on the strong net new business growth in Q4 and expectations for the upcoming year? A: Dominic Blakemore, CEO: We achieved a 4.2% net new growth for the full year, with 4.8% in the second half, and a particularly strong Q4. Retention improved throughout the year, reaching above 96% in the second half. We enter 2025 with positive momentum and aim for the higher end of the 4% to 5% range. Volume growth was strong, and we anticipate a slight positive in 2025, driven by our value proposition and technology enhancements.