Compass Group (LON:CPG) reported another strong quarter in its third-quarter trading update, with Group Chief Executive Officer Dominic Blakemore saying the company delivered organic revenue growth of more than 7% and maintained client retention at 96%.
Blakemore said net new business growth accelerated back into the company’s 4% to 5% target range, and Compass remains on track to deliver net new business growth at that level for the fifth consecutive year. He said that would represent more than GBP 2.2 billion.
Compass reiterated its 2026 guidance for above 11% underlying operating profit growth in constant currency. Blakemore said that outlook is supported by strong organic revenue growth, acquisitions and ongoing margin contribution.
New business wins rise 16%
Compass said it secured GBP 4.3 billion of new business wins over the last 12 months, up 16% year over year. Blakemore said roughly half of those wins came from first-time outsourcing.
Business and industry remained the company’s strongest-performing sector, delivering double-digit organic growth and more than GBP 2 billion of new business wins. Petros said the growth in business and industry was broad-based across subsectors, from financial services and banking institutions to attended vending, with about one-third coming from first-time outsourcing.
Executives also highlighted growth across several other areas:
- Education: Compass reported a record sales season in U.S. education, with Petros saying growth came from competitive wins in K-12, first-time outsourcing and competitive wins in higher education.
- Healthcare: Blakemore said six of Compass’ top 20 largest wins came from healthcare. Petros later said healthcare accounted for six of the company’s top 15 wins.
- Sports and leisure: International sports and leisure grew at a double-digit pace, with executives pointing to strong demand for premium fan experiences.
- Defense and data centers: Blakemore cited new account wins in U.S. defense and data centers as supporting progress.
Executives expect further net-new acceleration
During the question-and-answer portion of the call, analysts focused on the pace of net new business growth. Blakemore said Compass was pleased with quarter-on-quarter progress and expects further acceleration in the fourth quarter.
He said the 4% to 5% target is measured on a 12-month basis and may “oscillate” depending on the timing of contract mobilizations and the pace at which volumes build in newly won business.
Petros said Compass expects to remain within its medium-term algorithm, noting that the company expects to be a GBP 50 billion business this year. He said retention has remained at 96%, while international retention has held at 95%, which he described as a significant improvement versus pre-COVID performance.
International growth reflects lower inflation and event timing
Asked about international growth, which an analyst cited at 6.4%, executives said the region was affected by lower inflation and the timing of events compared with the prior-year calendar.
Blakemore said food cost inflation varies by geography and remains volatile because of geopolitical events and local weather patterns. He said pricing has slowed in some markets as inflation has eased, but Compass has more flexible contract structures than it did before the pandemic.
“What we’ve demonstrated in this business is our ability to price for inflation,” Blakemore said.
Petros said blended food inflation was running around 2.5%, while Blakemore said North America remained at about 3.5%. Petros added that Compass continues to see positive volume contribution, which he estimated at roughly 20 to 100 basis points, supported by the company’s value offer, premiumization and data-driven sales tools.
The company also discussed its role at the World Cup. Blakemore said Compass was the largest food and beverage partner to the event, covering more than a quarter of total matches. Petros said the World Cup contributed about 30 basis points to group growth in the third quarter and is expected to add about 10 basis points in the fourth quarter.
CapEx, M&A and buybacks remain in focus
Petros said Compass does not see a change in the underlying capital intensity of the business, but said spending can be lumpy because of the timing of large contract mobilizations. He said CapEx is expected to be about 3.7% of sales this year, compared with 3.3% last year, with a longer-term average of roughly 3.5%.
Compass expects to spend about GBP 1.6 billion in CapEx this year, with around 20% not directly client-facing and directed toward technology, data and artificial intelligence investments. Petros said organic CapEx investments generate returns on capital employed of more than 20% across the business.
On capital allocation, Petros said M&A spend was unchanged from the first half. He said Compass continues to focus on group purchasing organizations and attended vending, and that the company will evaluate the balance between M&A and buybacks when it reports full-year results. He said leverage is expected to be “a fraction higher” than 1.5 times in September and to decline during 2027.
Data centers seen as a growing opportunity
Executives also addressed demand from data centers, including both construction-phase and operating-phase opportunities.
Petros said Compass has been awarded “a couple of hundred million” pounds in data center work over the past nine to 12 months through partnerships with major technology companies. Blakemore said that of the six large technology companies that outsource, Compass is “the almost exclusive partner” to five.
Blakemore said the opportunity is developing quickly and includes food as well as support services. He said Compass prefers an asset-light model but would not rule out co-investment if the economics are attractive, citing the company’s experience in remote-sector operations in Australia.
Blakemore closed the call by thanking participants and said the company would speak to investors again in November.
About Compass Group (LON:CPG)
Compass Group is a global leader in food services, operating in over 25 countries, with over 590,000 employees worldwide and generating underlying revenues of over $46 billion for the 2025 fiscal year. The company’s primary listing is the London Stock Exchange and also trades on OTCQX® Best Market.
Our core offer is the provision of outsourced food services and targeted support services across the world. Compass operates across five sectors: Business & Industry, Healthcare & Senior Living, Education, Sports & Leisure, and Defence, Offshore & Remote, using a portfolio of bespoke B2B brands.
