(Alliance News) - Compass Group PLC on Monday announced a new share buyback and more than doubled its dividend, but said operating profit growth will be slower in the year ahead as it has regained pre-pandemic business levels.

The Surrey-based contract caterer said annual earnings improved, on the back of a "record net new business". Compass said pretax profit jumped to GBP1.47 billion in the financial year that ended September 30 from GBP464 million the year before.

Revenue rose 43% to GBP25.51 billion from GBP17.91 billion, topping company-compiled consensus of GBP25.1 billion.

The company cited a post-pandemic recovery, highlighting its Sports & Leisure and Education units. Revenue in Sports & Leisure surged to GBP3.68 billion from GBP1.55 billion, while revenue in Education jumped to GBP4.83 billion from GBP3.27 billion.

Revenue in Compass's largest unit, Business & Industry, grew to GBP8.40 billion from GBP5.61 billion.

"The group's performance surpassed our expectations both in terms of net new business growth and base volume recovery, with Business & Industry now operating above its pre-pandemic revenues. The strong growth trends seen in the first half have continued, with net new business accelerating through the year in all our regions," Chief Executive Dominic Blakemore said.

Compass lifted its total dividend to 31.5 pence per share from 14.0p. In addition, it announced a further GBP250 million share buyback, taking the current programme to GBP750 million.

For financial year 2023 which began in October, Compass expects constant-currency underlying operating profit growth of above 20%, slowing from 88% in the pandemic-recovery boosted year just completed. It will be heavily weighted towards the current first financial half. However, Compass expects the underlying operating margin to rise to above 6.5% from 6.2%.

Compass shares were down 2.6% to 1,802.00 pence each in London on Monday morning.

By Tom Budszus; tombudszus@alliancenews.com

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