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Workers returning to the office have helped Compass boost first-half profits past £1bn as the catering giant continued its recovery from the pandemic.

Revenues at the group increased 36.2% to £15.7bn in the six months ended 31 March 2023 thanks to new business wins and currency tailwinds.

Organic growth of 25% reflected new business growth above historical levels of more than 5%, with like-for-like volumes up about 13% and pricing benefits of 7%.

Operating profits jumped 41% as a result to £1.1bn.

Compass lifted its full-year outlook on the back of the first-half performance, now expecting operating profit growth towards 30% rather than above 20% on the back of organic revenue growth of about 18%, up from 15%.

CEO Dominic Blakemore said the group performed strongly in the first half of the year, benefiting from balanced growth across all regions.

“Net new business continued to be excellent, and significantly higher than our historical rate,” he added. “We are particularly pleased with the step change in our Europe performance which has benefited from growth initiatives as well as favourable outsourcing conditions.

“Despite pockets of macroeconomic weakness, the outsourcing market remains very attractive. We believe that many of the complexities that drive outsourcing, such as increased regulation, changing client and consumer expectations, and inflation, are here to stay. With our strong cash generation, we continue to invest in our business and evolve our operating model, further enhancing our scale and competitive advantage.”

Compass said first-time outsourcing trends accounted for about 45% of new business wins in the half.

The group also reported double-digit increases in organic revenue across all sectors in the period, with a particularly strong performance in business & industry, as employees continued to return to the office, and sports & leisure, where participation rates improved.

Compass announced it would start reporting in US dollars from 1 October to align with its business exposure and reduce foreign exchange volatility on earnings.

Morning update

CBD wellness company Cellular Goods has secured a contract with Sephora to sell its ‘Look Better’ skincare range on the multinational beauty and cosmetics retailer’s e-commerce website from the second half of May.

The group said in a statement to the stock exchange this morning that it would become the first cannabigerol-based (CBG) skincare brand to offer its products on Sephora UK, and the move was part of the company’s enhanced retail strategy to drive growth by expanding sales channels and increasing collaboration with established online and high street outlets.

Chairman and interim CEO Darcy Taylor said: “The launch bridges the gap between customer awareness and sales by making it easier for customers to purchase our products.

“We’re confident that our effective next-generation skincare formulations will appeal to their existing customers and encourage them to try our CBG-powered products. The Sephora launch is part of our continued customer acquisition strategy, as we continue to increase awareness of our products and grow our sales channels.”

The FTSE 100 opened a touch higher this morning, up 0.1% to 7,770.20pts.

Compass leads the early risers after strong results, up 2.4% to 2,114p, with Bakkavor also up 2% to 96.7p, McBride up 1.7% to 32.8p and Naked Wines up 1.4% to 113p.

Hotel Chocolat is among the fallers, down 1.4%, with AG Barr down 0.4% to 527.7p and Cranswick down 0.7% to 3,198p.

Yesterday in the City

The FTSE 100 slipped 0.2% to 7,764.09pts as the market reopened after the coronation bank holiday weekend.

Over in the US, Oatly shares were lifted 0.7% in early trading to $2.16 after it announced a new CEO to takeover from long-serving boss Toni Petersson. The shares closed 1.9% higher at $2.19.

In the UK, the only market news to influence food and drink stocks came from drinks ingredients supplier Treatt, with shares falling 1.6% to 653.2p despite a strong showing in the first half.

Risers yesterday included Marks & Spencer, up 1.2% to 166.2p, and Premier Foods, up 0.3% to 126.6p.

Fallers included THG, plunging 11.3% to 86.2p, and Cranswick, down 0.7% to 3,240.7p.