Caterer Compass resumes dividend on upbeat profit as economies reopen

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(Reuters) – Catering giant Compass Group on Tuesday resumed dividend payouts, forecast fiscal 2022 underlying profit margin to be over 6%, and reported better-than-expected annual profit, as it benefits from economic reopenings and record new business wins.

The world’s largest catering company, which had suspended dividends in April 2020 to deal with the blow from COVID-19, said it would pay an annual dividend of 14 pence per share.

“With ongoing mobilisation costs and inflationary pressure, further improvement will be weighted towards the second half of the year as we return to underlying margin of around 7% by year end,” said Chief Executive Office Dominic Blakemore.

Food catering volumes at Compass have picked up from pandemic lows, as students return to universities and schools, sports fans fill up stadiums and crowds attend music events again. New businesses have also risen as more companies outsource their catering needs for the first time to cut costs.

Its underlying operating profit for the year ended Sept. 30 rose 55.4% to 811 million pounds ($1.09 billion), while underlying revenue recovered to 88% of 2019 levels by the fourth quarter.

Analysts on average had expected underlying operating profit of 797 million pounds, according to a company-compiled consensus.

Compass, which serves office staff, students, seniors in old age homes, armed forces and events attendees across 45 countries, expects fiscal 2022 organic revenue growth to be 20%-25%.

The company’s outlook comes after French catering and food services group Sodexo said last month it expects sales to accelerate in 2022 and will resume dividend payments after posting better-than-expected annual results.

Compass also said there was still some uncertainty related to labour shortages, inflation and the pandemic, which was expect to continue hurt its business in the nearer term.

($1 = 0.7470 pounds)

(Reporting by Yadarisa Shabong in Bengaluru; editing by Uttaresh.V)