Compass Group PLC

Revenue increased 9%, with organic growth just over 7% and acquisitions adding 1.5 points. Operating profit increased 12% to more than $1.8 billion, with 20 basis points of margin expansion. EPS increased 12% in constant currency. Net interest expense was $166 million, the effective tax rate was 25.5%, and operating cash flow rose 14%. CapEx was 3.4% of revenue, and management expects CapEx around 3.5% of revenue for the full year. Full-year guidance was raised to operating profit growth above 11% in constant currency, reflecting around 7% organic revenue growth, around 2% profit growth from M&A, and continued margin expansion. Management also expects net new business growth to accelerate in the second half and remain within the 4% to 5% target range in 2026, with interest expense around $350 million, tax stable, and working capital broadly neutral at year-end.

Dominic Blakemore emphasized that Compass is benefiting from a large and still-growing outsourcing market, strong client retention, and a sector-led model that combines local relationships with global scale. He said the company’s growth is increasingly driven by first-time outsourcing, with 85% of new business coming from first-time outsourcing and local players, and pointed to AI, data, GPOs, and international Sports & Leisure as additional growth engines. His tone was confident and upbeat, repeatedly highlighting the durability of the model and saying the company is better positioned than ever.

Petros Parras walked through the half-year financials, highlighting 9% revenue growth, operating profit above $1.8 billion, and 12% EPS growth in constant currency. He cited 20 bps of margin expansion, $166 million of net interest expense, a 25.5% effective tax rate, CapEx at 3.4% of revenue, and a 14% increase in operating cash flow despite seasonal working-capital outflows. He also noted leverage of 1.7x after the Vermaat and Pro Care Management acquisitions, reiterated a 50% dividend payout policy, and said the company targets 1 to 1.5x leverage over time.

Analysts focused on the Q2 net new slowdown, retention softness, pricing, and whether competitive intensity was rising. Management said weather delays in North America pushed back mobilizations, hurting net new in the quarter, while retention remained bumpy quarter to quarter but above 96% over time; they expect net new to reaccelerate in the second half and end the year in the 4% to 5% range. Questions also probed GPOs, M&A, data centers, health care, and whether the company might return capital via buybacks; management said the M&A pipeline will be reviewed later in the year, but current priorities are bolt-ons and GPO expansion, while data centers and AI are already part of existing client relationships and offers.