Investing.com — Compass Group (LON:) on Tuesday reported in-line outcomes however flagged issues over distinctive prices and cautious ahead steering.
Compass reported fiscal 2024 revenues of $42.2 billion, reflecting natural progress of 10.6%, barely above the consensus of 10.5%. EBITA matched expectations at $2.998 billion, with underlying margins in line at 7.1%.
The corporate additionally posted an EPS of 119.5 cents, underpinned by a 13.7% improve in its proposed dividend per share to 59.8 cents.
Free money circulate rose 15% year-over-year to $1.74 billion, and internet debt stood at $5.39 billion, sustaining leverage at 1.3x.
Some extent of concern was the $160 million cost associated to Compass’s discontinued European ERP program.
This included a $146 million non-cash impairment of head-office software program property, which RBC Capital Markets famous might distort future comparisons by lowering IT depreciation and amortization prices.
Regardless of this, Compass expressed optimism about sustaining mid-to-high single-digit natural income progress and ongoing margin enhancements within the coming years.
Outlook for fiscal 2025 consists of excessive single-digit progress in underlying working revenue, supported by over 7.5% natural income progress and continued margin development.
Nevertheless, analysts at Morgan Stanley (NYSE:) echoed issues about near-term headwinds, together with elevated prices, subdued non-North American margin restoration, and the absence of a brand new share buyback program.
Whereas Morgan Stanley maintains an “obese” ranking, RBC Capital Markets is much less bullish, with “sector carry out” ranking with a worth goal of two,400 pence, under the present share worth of two,653 pence.
Geographically, North America remained the expansion driver with 10.5% natural progress, supported by sturdy efficiency within the Enterprise and Trade section.
Europe and the remainder of the world additionally contributed, however at slower progress charges of 11.9% and eight.5%, respectively.
Analysts underscored the corporate’s dominant place within the North American market, which constitutes practically 50% of the outsourced foodservice sector, whereas cautioning in regards to the challenges posed by powerful comparables and evolving macroeconomic situations.
Shares of the corporate have been up 1.6% at 5:30 ET (1030 GMT).