(Reuters) -Shares in catering group Compass fell around 5% on Monday after analysts gave a downbeat assessment of the company's profit guidance for its next financial year.
Compass said it expects 2024 underlying operating profit to grow about 13%, roughly in line with market expectations, aided by businesses looking to outsource canteen requirements as they deal with macroeconomic pressures.
But some analysts, calling the forecast "conservative", predicted headwinds from the company's expected rise in finance costs to 225 million pounds and an underlying effective tax rate seen at 25.5%.
The world's largest catering group reported a nearly 30% jump in adjusted operating profit to 2.12 billion pounds ($2.64 billion) for its 2023 financial year ended Sept. 30, also in line with market expectations.
"Going forward, we expect to sustain mid to high single digit organic revenue growth and ongoing margin progression leading to profit growth ahead of revenue growth and increased cash generation," CEO Dominic Blakemore said in a statement.
The company, which provides food catering services to offices, universities and sports stadiums in about 35 countries, has benefited from new business and high prices, although red-hot food and wage inflation have squeezed its margins.
In the 12 months to end-September, it signed 2.7 billion pounds of new business, with first-time outsourcing accounting for about 50%. Annual underlying revenue rose 18.8% to 31.3 billion pounds, with growth across its markets, and margins were 6.8%.
Compass, which will cater the 2024 Super Bowl in Las Vegas and the Grammy Awards, is now focusing on deeper penetration in its larger markets after exiting nine countries in the recent past.
The London-listed company, which will report its results in U.S. dollars going forward, announced a $500 million share buyback for 2024, subject to merger and acquisition activity.
It also said that after its year end, it bought German cook and freeze meal producer Hofmann Menü-Manufaktur GmbH, and exited its small operations in Argentina and Angola.
($1 = 0.8025 pounds)