Earnings call transcript: Compass Group upgrades guidance amid strong Q3 2025 growth

Compass Group PLC (CPG) has reported robust financial performance for Q3 2025, leading to an upward revision in its full-year guidance. The company achieved an organic revenue growth of 8.6% and announced an acquisition to bolster its European operations. Despite a slight dip in stock price, the company’s strategic moves and solid performance maintain its strong market position.

Key Takeaways

• Compass Group reported an 8.6% organic revenue growth in Q3 2025.
• Full-year guidance for underlying operating profit growth upgraded to 11%.
• Acquisition of Vermat aims to enhance European market operations.
• Client retention remains high at over 96%.
• Stock price fell by 0.83%, closing at 2,521, amidst broader market trends.

Company Performance

Compass Group demonstrated significant growth in Q3 2025, with an 8.6% increase in organic revenue. This growth is attributed to strong performance across all sectors, particularly in North America. The company’s focus on client retention and strategic alliances has resulted in net new business signings of 3.7 billion dollars, representing a 6-7% increase year-on-year. The acquisition of Vermat is expected to accelerate its sectorization efforts in European markets, further strengthening its competitive position.

Financial Highlights

• Organic revenue growth: 8.6% in Q3 2025
• Full-year operating profit growth forecast: Revised to 11%
• Net new business signings: 3.7 billion dollars, up 6-7% YoY
• Client retention: Above 96%

Outlook & Guidance

Compass Group has upgraded its full-year guidance, expecting constant currency underlying operating profit growth towards 11%. The company anticipates maintaining mid to high single-digit organic growth in international regions. It aims to achieve a net debt/EBITDA ratio of 1.5x by the end of September 2026, with no share buybacks planned for fiscal year 2026. The company also sees potential for additional small bolt-on acquisitions.

Executive Commentary

Dominic Blakemore, Group CEO, stated, "We now expect constant currency underlying operating profit growth to be towards 11%." He also emphasized the strategic importance of the Vermat acquisition, describing it as "an exceptional business and a unique asset." Petros, the CFO, highlighted the positive trend in first-time outsourcing, which remains a strong driver of new business wins.

Risks and Challenges

• Food and labor inflation: Food inflation is around 3% in Europe and slightly higher in North America, with labor inflation at approximately 4.5%.
• Economic uncertainties: The macroeconomic environment, while currently positive, could pose challenges if conditions change.
• Competitive pressures: The company must continue to differentiate itself from high street restaurants and other competitors.
• Integration risks: The successful integration of Vermat is crucial for realizing expected synergies and growth in Europe.

Compass Group’s strategic initiatives and strong performance position it well for continued growth, despite challenges posed by inflation and competitive pressures. The company’s focus on innovation and sectorization, particularly in Europe, is likely to support its long-term objectives.

Full transcript - Compass Group PLC (CPG) Q3 2025:

Conference Call Operator: Welcome to the Compass Group’s third-quarter trading update conference call, hosted by Dominic Blakemore, Group Chief Executive Officer. This call is being recorded. To ask questions, please press star one on your touchstone keypad. I will now turn the call over to Dominic Blakemore for his opening remarks. Please go ahead, sir.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Thank you. Good morning and welcome to our third-quarter trading update. As usual, Petros is alongside me. I’ll start with some highlights on recent trading before discussing the exciting strategic platform acquisition in Europe that we’ve also announced today. The group delivered another strong quarter with organic revenue growth of 8.6%. While both regions performed well, North America was particularly strong across all sectors. Net new business continued in the middle of our 4-5% range, supported by strong client retention of above 96%. Our M&A is performing better than expected, with the integration of recent acquisitions progressing well. As a result, we’re upgrading our full-year guidance. We now expect constant currency underlying operating profit growth to be towards 11%, driven by organic revenue growth above 8% and ongoing margin progression. Now, turning to the acquisition of Vermat, which is subject to regulatory approval.

Vermat is an exceptional business and a unique asset which will help us accelerate sectorization and provide a strong platform for expansion in Europe. It specializes in tailored on-site food concepts, delivered in solutions, and strong consumer-focused retail expertise, which will significantly strengthen our premium offer across the region. The exceptional leadership team has a strong track record of performance, delivering a compound annual growth rate of nearly 20% over the last 15 years and industry-leading margins. Its high retention rate reflects the quality of the offer and strong customer relationships. In North America, we’ve leveraged acquisitions to build a high-growth market leader, and we’re replicating the same strategy in Europe. Its margin and EPS accreted to Compass in the first full year of ownership and represents a step change in our capabilities and offer.

In summary, our trading performance remains strong, and we’re upgrading our profit guidance for the year. We’re excited about the potential acquisition of another fantastic business with an exceptional management team. The business is in great shape, the market remains strong, and we’re hugely excited about the future. Thank you. Now, over to the operator, and we’ll take your questions.

Conference Call Operator: Ladies and gentlemen, this call is being recorded. If you would like to ask a question, please press star one on your telephone keypad. Again, to ask a question, please press star one. Our first question is from Jamie Rollo from Morgan Stanley. Please go ahead.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Thanks. Good morning, everyone. Three questions, please. Just on the trading update first, the North America and international organic sales growth figures diverged quite materially in Q3, so a three-point spread. They were very similar in the first half. You’ve obviously called out a couple of items in the statement, but how should we think about the underlying rate of those two regions and what that means for the Q4 exit rate and also 2026? Secondly, it looks like most of the profit guidance upgrade is that better acquisition performance. Are there any sort of changes to your underlying margin assumptions or thoughts for either this year or indeed next year? And then finally, just on Vermat, the return on capital looks somewhat low if you’re paying sort of 20 times EBIT on that double-digit margin. I mean, can margins go any higher given where they are?

And secondarily, presumably with leverage at one and a half times next year, that puts a buyback sort of off the table for maybe a year and a half or so. Thank you.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Thank you very much, Jamie. I’m going to hand you over to Petros for those questions, and then I’ll come back at the end.

Petros, CFO/Finance Leader, Compass Group: Morning, Jamie. How are you? Let me just put a quick call on North America and international. We continue to be pleased on North America performance, broad-based sector performance. If you look at the run rate in Q3, we have been positively surprised by some additional hospitality events that are driving Q3. You see some good recovery from Q2. We talked about a couple of noise in the Q2 numbers. Retention remains to be very strong across all of the sectors. We expect to have some moderation of these trends in Q4, which is factored in our guidance. I will come to our guidance in a second. When I go to international, practically, there is about a point difference behind inflation between international and North America. Then we have a bit of a timing of mobilizations between Q2 and Q3 for the international business.

We had a quite large event in sports and leisure in Australia in the first half of the year. We do expect the run rates of international in Q4 to do better than what we see in Q3. If you think about our guidance for the full year, we expect to be above 8%. Which practically, we’re factoring the additional events not to repeat in Q4. If they were to repeat, we’re going to do a little better on a full-year guidance. When it comes to profit upgrades, you have seen our guidance is towards 11%. Pretty much the upgrade is based on strong underlying organic growth above 8%. We have a better than expected M&A. Remember, we are through four acquisitions. We are having a bit better synergies than what we thought, which is very pleasing to see.

On top of this, the timing we had assumed on some of these deals, we managed to close them a little faster. No change on the underlying margin is pretty much better M&A behind these two drivers I mentioned. When I go to the, your third question was on the Vermat. Dominic is going to reference a few points here. Our view here is Vermat is an exceptional business. It’s a platform asset that helps us to further sectorize Europe. Its roots and founding is on a retail consumer-facing offer that the business has built over time. It’s an exceptional management team. It reflects a quality of the business on high single-digit growth rates consistently for many, many years with double-digit operating profit growth. This is reflected in the valuation. The experience we have so far from the deals we have executed is we deliver on the synergies.

We expect synergies to help us to drive over the medium-term attractive returns. We do expect with this acquisition to be around our 1.5 leverage by the end of September 2026. Within this, we have also the opportunity to continue to execute our bolt-ons in fiscal year 2026. I’ll take a pause, and I’m going to pass it to Dominic.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Yeah, thanks, Petros. And thank you, Jamie. I think all I’d add to that is just really to say we really do believe that Vermat is an exceptional business. I think it’s the best in class. Independent food service business outside of North America. I think it truly compares to both Restaurant Associates and Bon Appétit when we acquired those businesses. It operates in the premium segment of BNI. And also in certain other sectors. We believe it can continue to grow at these levels in the three markets where it currently operates: Netherlands, France, and Germany. It also has the potential to provide us with that premium BNI offer across other European markets. I think what we see with this acquisition is we’ve now built the foundations to be able to really address subsectorization in BNI across Europe. That means having a premium brand and a core brand.

It also means we can address SMEs as well as large-scale businesses on site. Vermat has an exceptional delivered-in offer through its joint technology program, a very high-quality offer which is produced off-site. With the other acquisitions that we have made, we now have the ability to provide our services to multi-tenanted buildings as well as large-scale single-tenanted buildings and SMEs. We really do feel both across the types of clients we have and the types of offer that those clients want. We’ve now built, or are building, a sectorization of offers that can serve all of those different communities. For that, we think this is very exciting. As you rightly say, look, it commands a premium multiple as a very attractive, high-quality business. It will be accretive to us in growth, margin, and earnings in the first year.

We’re very confident that those attributes that we’ve described will ensure that we deliver attractive returns over the short-term, medium term.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Thanks. The question about buyback, presumably that’s unlikely now till 2027. Are there any more deals on the hopper?

Petros, CFO/Finance Leader, Compass Group: I would say. For next full year, end of September 2026, you should not expect any buybacks. We will be able to continue to do some bolt-ons for North America and international. In 2027, we are going to reconsider what is the best allocation of capital. Remember, our priorities remain the same on how we deploy capital.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Yeah. In terms of your question, Jamie, on other acquisitions, there is one remaining deal we are interested in, again, in the European region, but that would be in the sort of low single-digit hundreds of millions, not anything like the scale of the deal we have announced today. It would fit within our bolt-on strategy. I think this really is for us sort of the end of this phase of building the platform assets that we feel we need so that we have got confidence in our offer in Europe to replicate that North American strategy. It is very much about consistent execution. We think what this does is really gives us the ability to sit in that medium to high single-digit organic growth range in the international region consistently.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Thank you very much.

Conference Call Operator: Thank you. Our next question is from Simona Sarli from Bank of America. Please go ahead.

Various Analysts, Analysts, Multiple (Bank of America, etc.): Yes, good morning. Thanks for taking my question. There are a couple of follow-ups on what has been discussed previously. Can you give a little bit more color on what is the synergy potential and phasing? Also, try to split it a little bit between cost and revenue synergies. Also, can you elaborate a little bit more on the lumpiness in mobilization in Europe? What has been causing that and what gives you confidence that you are on track for some of these to come back in Q4? Thanks.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Sure. Thank you, Simona. I mean, look, you would not expect us to quantify the synergies on a deal of this size, but the synergies would be typically the ones that you would expect from our MAP III and food purchasing in particular, and from our overhead leverage, particularly in the main market of the Netherlands. That would be similar to what the deals that we have done, and we are confident from past experience that we have good line of sight of those synergies and that we can execute strongly against them. In terms of lumpiness, I think, as Petros says, it really is all about the Melbourne tennis, where the Australian Open is the biggest single event in that contract. It happens in the second quarter of our calendar year.

You will have seen that our sports and leisure performance was very strong in international in the first half. Obviously, we continue to operate that contract, but there are fewer events, so it slows a little. We are confident in our net new in international, and we are confident in the run rates of organic growth in international for the fourth quarter that it will revert to something more like the group average.

Various Analysts, Analysts, Multiple (Bank of America, etc.): Thank you. Just one last one on client retention that you mentioned is above 96%. Can you explain a little bit if it is slightly sequentially better compared to Q2 or flat? Also, if you can elaborate a little bit between International and North America and the sequential trends there? Thank you.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Yeah. I mean, it’s broadly flat, half on quarter and quarter on quarter around that 96% level. Retention in North America is slightly better than international. We’ve had a very strong run on retention in North America. Again, those trends are broadly in line with what we’ve seen before, what we would expect, and how we expect to trend as we go forward.

Various Analysts, Analysts, Multiple (Bank of America, etc.): Thank you.

Conference Call Operator: Thank you. We will now move to our next question from Simon Lechypre from Jefferies. Please go ahead.

Various Analysts, Analysts, Multiple (Jefferies, UBS, etc.): Yes, good morning. Three, if I may. First of all, follow-up on retention. In the previous earnings call, you shared some forward-looking data on retention. So wondering if you have any update and if these forward-looking indicators continue to point toward retention above 96% for the coming quarter. Secondly, on new business wins, I think it’s to that $3.6 million in H1. So could you provide an update on where does it stand by Q3? And lastly, on Vermat, on the double-digit growth achieved over the past years, was it purely organic or did the company complete any acquisitions? Thank you.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Yeah. Thank you, Simon. I mean, look, on retention, I think we said it on the previous question that we aim to remain above that 96% level as we go forward. I think we’ve talked on previous calls about the opportunities we see to continue to improve sequentially. What we do on retention, we’re very focused on the disciplines of the strategic alliance group across all of our major markets and also deploying our retention processes on the tail of non-sec accounts. We think there’s always more that we can do there. We remain super focused. Yeah, staying above 96% is the aim. In terms of new business wins, I think LTM, new business signings, last 12 months new business signings at the end of the third quarter was around $3.7 billion, which was up 6-7% on the same metric a year ago.

I think we’re going in the right direction there. Finally, just on the Vermat growth, it was about half-half, so half organic, half inorganic, and that has been part of their model as they have consolidated and brought in the smaller businesses. Very similar to what we’ve done, but a very attractive organic growth rate within that as well.

Petros, CFO/Finance Leader, Compass Group: That’s right. To Dominic’s point on, just keep in mind, first-time outsourcing remains very positive. The trends continue to be intact. We’re capitalizing the opportunities. Q3 was about 48% of new business wins. We look forward to driving this further.

Various Analysts, Analysts, Multiple (Jefferies, UBS, etc.): Thank you.

Conference Call Operator: Thank you. Our next question is from Jaafar Mestari from BNP Paribas. Please go ahead.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Hi, good morning. Two questions, please, on things you said. On North America, you’ve mentioned you expect a moderation of the trends into Q4. I just wanted to clarify that this applies entirely to your point on like-for-like volumes being strong in Q3. On Vermat, what are the acquisitions we need to keep in mind when assessing the growth of the business over time? There are a few different ways you’ve talked about this. They all look very strong. I think in the press release, you say 20% over 15 years, obviously from a small business. On this call, double-digit operating profit growth. Just trying to get a sense of just adding this business to your international platform, how much stronger would organic growth instantly be before you maybe start cross-pollinizing and benefiting from their digital and branding superiority, etc.? Thank you.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Thank you, Jaafar. If I take the Vermat question, then I’ll hand to Petros for the question on North America. I mean, look, you’ve heard me just say that. The Vermat growth has been double-digit organic. That would be slightly accretive to our international growth rate as it stands today. What we really see in Vermat is the opportunity and ability to allow us to sustain the mid to high single-digit organic growth rates sustainably and consistently over time. In giving ourselves that premium brand in BNI, we really do think that the combination of our subsectors allows us to consistently perform and deliver over time. I think that’s the key. We also said it has a double-digit operating margin, so it would be accretive off the bat from a margin standpoint. Then, of course, there will be synergies on top of that as well.

We’re still awaiting competition approval for it, so we will give you more color on that when we speak to you in November.

Petros, CFO/Finance Leader, Compass Group: On North America, Jafar, it’s all driven by volumes were positively surprising. Q3 came stronger than what we anticipated. We do expect some of this to moderate in Q4. And this is what is back in the garden.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Yeah. I mean, I think it’s worth saying as well, we had a very good Q3 in both B&I and education. So double-digit growth in both of those sectors in North America. As well as the events in the calendar in sports and leisure. Those events are broad-based and positive. And as Petros has rightly said, we’re not factoring that into the guidance. Should we see that in the run rate, that would be an upside to where we stand today.

Conference Call Operator: Thank you. Thank you. We will now take our next question from Praveen Gondali from Bartleys. Please go ahead.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Hi, morning. Thanks for taking my questions. Firstly, on the volume growth, can you share a bit more color on the volume growth, the underlying volume growth in Q3, and excluding the one-off hospitality contribution in this quarter, and sort of confidence you have in delivering positive volume growth next year. On the Vermat acquisition, can you just talk a bit more about more recent performance of the business in more recent years, especially after Q4? Yes, you talked about double-digit organic growth here, but more on the margin front there as well. That would be helpful. Thank you.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Praveen, thank you. You would not expect us to go into that level of specificity around ongoing acquisition, I think. Look, just as we have said, the performance has been consistent over 15 years with double-digit organic growth in recent years. We are very excited about the potential of that business within the Compass Group. When it comes to the point about volume, we said around a point of positive volume. This year, we expect volume to continue to be positive next year, but we would expect it to moderate a fraction from what we are seeing. That is our view in the short term for next year. Petros, would you add anything to that?

Petros, CFO/Finance Leader, Compass Group: I was going to say, practically, you see the manifestation of our value gap to the high street. We talked this in the past. We saw about the gap when consumers are using our offer. We see our clients having more events in the premises. It’s quite competitive out there when you go compared to the high street. This is what we keep enjoying in North America and international.

Conference Call Operator: Thank you. That’s really helpful. Thank you. Our next question is from Andre Julliard from Deutsche Bank. Please go ahead.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Good morning, gentlemen. Congratulations for this strong publication. Three questions, if I may. First one about the US. Could you give us some more color about the healthcare trend and, in general, the way you see inflation evolving? Second question about Europe. Could you give us some more granularity about the profitability you’re expecting to register in this region, considering that historically their profitability has been lower compared to the US? At last, a small question about leverage. You said this morning in the press release that you are targeting 1.5 times net debt/EBITDA at the end of 2026. Could you give us some more visibility about the mid-term target for leverage, considering that, correct me if I’m wrong, it was more or less one time before today’s acquisition? Thank you.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Yeah. Thank you. I’ll let Petros take the first and third question. And then just with regard to Europe, I mean, I think we look at it really in terms of sort of North America international. There’s about a two-point gap between the two regions. We expect over time that the margin in North America should continue to incrementally progress as we enjoy operational and overhead leverage at the growth levels that we’re delivering there. We’d expect the margin in the international region to incrementally grow, but faster than North America to start to close that gap. Part of that will be leverage. Part of that will be acquisitions. And part of that will be the efficiency opportunities that we see. I think you have to remember that we have a different business model in international than we do in North America. We don’t enjoy the scale of North America.

We don’t have the scale of Foodbuy. But we see opportunities to build some of those attributes into our operating model outside of North America and continue to close the gap. But as North America grows itself, and that will contribute to ongoing, consistent, sequential margin progression at a group level.

Petros, CFO/Finance Leader, Compass Group: Andrea, good morning. On USA, on healthcare, we continue to perform well. I’m sure you have seen a lot of Medicaid articles there. We haven’t seen anything to our business yet. We’re not complacent. We’re well placed and very close to our clients to see how these things evolve. I just want to tell you, historically, this sector has been always under pressure with Medicaid, Medicaid. And somehow the system was able to digest some changes. If this is not the case, I think it’s going to lead to more first-time outsourcing for us. Remember, healthcare in the US, half of this is in-house. It is going to give us some good opportunities if we were to see any adverse impacts. So far, we haven’t seen anything. When it comes to net debt/EBITDA, our leverage ratio continues to be 1-1.5.

In the last three years, we have hovered anywhere between 1.3-1.4. I don’t recall we were close to one times in the last three years or so. We’ll continue to be there. I think what is interesting is by September 2026, we would be able, subject to regulatory approval, to have digested this acquisition of Vermat. We have the opportunity to continue to invest in bolt-ons. This is going to give us further scope for 2026. We’ll start by deleveraging 2026 and going to revisit the capital allocation decisions.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Okay. Thank you very much. Just to follow up, maybe on Vermat, you are expecting the closing to take place at the end of the fiscal year and therefore to have a full contribution in 2026, or it’s too short?

Petros, CFO/Finance Leader, Compass Group: We don’t know. This is all subject to regulatory approval. It may take, we have to follow the process. We’ll let you know once we have an update.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Okay. Thank you very much.

Conference Call Operator: Thank you. Our next question is from Leo Carrington from Citi. Please go ahead.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Thank you. Three questions from me also. Firstly, just quickly on Vermat, how does the maybe EUR 500 million of Netherlands revenue you’re acquiring compare to your existing footprint in the country? Secondly. In North America, you’ve mentioned hospitality volumes again. It feels like sports and leisure is often positively surprising on volumes. Can you outline latest trends in terms of attendance numbers at your venues versus the success of your offer and the per caps? And then lastly, on margins. Maybe this is something for the full year, but North America margins essentially back to 2019 levels. What’s the right way to look at international, given that. Some higher margin businesses have been disposed of? Should we really be expecting. Better underlying international margin expansion going forward?

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Thank you. Thank you for those questions. Yeah. Let me just tack on margins first. Look, we talk about the sort of pre-COVID margin level. I think we have to recognize that we are in many ways a different business today. We’ve disposed of a number of companies. You’re right, you say some of them did have higher margins, but were more volatile and less attractive for the longer term. At the same time, we’ve obviously been through a very significant spike in cost inflation that we’ve had to recover through pricing and efficiency. I think the margin structure today is different. All of that said, we do believe that we’ll be trending toward 2019 levels on a group basis as we exit this year toward or at, and we will continue to make progress from there.

Yes, I think it’s absolutely right that you should expect us to make progress from here in international. We’ve made attractive acquisitions, as you’ve heard us say today, that are performing well. We see lots of opportunity to grow the margin from here. In terms of the points on volumes, yeah, the hospitality volumes in BNI are positive, and that’s exciting. In sports and leisure, we largely see increased footfall across most of the different sporting codes in North America and strong per capita spend patterns. As you’d expect, though, we’re probably seeing those starting to sort of flatten rather than be incremental period on period. That’s still positive, but it’s not quite the level of growth that we experienced as we talked to you about what we described as the revenge spend post-pandemic.

I think that has now started to normalize in the sports and leisure sector, which, again, is fine. It’s not negative, but it’s not quite as positive as we were experiencing.

Petros, CFO/Finance Leader, Compass Group: To your question on Vermat, just to remind you, the geographical presence of Vermat, Netherlands, Germany, France, fully aligned to our top 10 group markets. These three markets, Netherlands, Germany, France, is about half of continental Europe market size. We’ll be able to take opportunities on. Netherlands is pretty much three-quarters of the Vermat business, nearly double the size of our business in Netherlands, and gives us opportunity to grow more. In Germany and France, we have great opportunities to build on the successful model the Vermat team has launched today. On top of this, as Dominic referenced before, we have an opportunity to roll out the premium offer of Vermat within other continental European markets.

Conference Call Operator: Thank you very much, Petros, Dominic.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Thank you. Our next question from Estelle Weingrot from JPMorgan. Please go ahead.

Various Analysts, Analysts, Multiple (Bank of America, etc.): Hi, good morning. Not too many questions left for me. The first one on higher education in North America. We’ve now entered the summer months, so you probably have slightly better visibility into the fall term ahead. Is there anything worth flagging? And then just another question. I mean, across the board, more generally speaking, any signs of some sort of macro weakness and slowdown in decision-making process in Europe or North America? I mean, obviously, your results are not pointing to any weakness whatsoever. Thank you.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Thank you, Estelle. I mean, just on the second question first, I mean, the simple answer at this point is no. I mean, you’ve heard us talk about further increase in our gross new signings over the last 12 months, continuation in our retention trends, and positive like-for-like volumes. Look, I think the macro environment remains pretty positive for us. Why do I say that? Again, we talked to you a lot about we do believe that our operating model is resilient. We think our operating model is even more resilient now that we’ve focused the portfolio of countries in which we operate. I think the point that Petros made earlier remains really relevant that we talk about this value gap to the high street.

We’ve seen the pressure the high street is under for many reasons, whether it’s NI costs in the U.K., it’s minimum wage costs across the piece, it’s the food cost inflation that continues and has spiked again in North America. All of those factors are leading to, we believe, a significant cost advantage in our business models out of the high street. We think that that’s very attractive to outsourcing and to the first-time outsourcing trends that we, again, referenced today being sort of nearly 50% of our total wins. Look, it feels like we’re a resilient business and performing well in the current macro. We’re not seeing any particular signs of weakness affecting that here and now. Petros on higher ed?

Petros, CFO/Finance Leader, Compass Group: On higher education, as Dominic referenced, we keep performing well. To be honest, your question on enrollment, we’re going to have a better view as we go towards September. So far, we haven’t seen anything warning us. I just want to remind you the opportunities we have on first-time outsourcing and higher education are quite significant. If they’re going to go through more cost pressure, it will create opportunities for us. This has been the case in the past. What we’ve seen in higher education, we’re seeing more of a multi-tiered offer that spans different consumer base, not only the students. It’s the board. It’s the visitors. It’s the faculty. We expect this to be fairly resilient. We’re going to monitor enrollments and provide an update as we go in the full year.

Conference Call Operator: Thank you very much.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Thank you. We will now take our final question today from Ivar Befog Kelly from UBS. Please go ahead.

Various Analysts, Analysts, Multiple (Jefferies, UBS, etc.): Thank you very much. Sorry if I missed it, but I think you mentioned that inflation is tracking below. In Europe, it’s tracking below where it is in North America. Given inflation seems to be pretty sticky, what does that actually mean going into next year? Secondly, looking at Vermat, it looks like it actually operates in some segments which aren’t core operations for you, like travel retail. Does that actually represent a potential expansion of your planned scope of your digital markets? Lastly, I mean, maybe you can give us some color, even if it’s only qualitative, on how compliance, rather, is tracking within Foodbuy and how this acquisition of Vermat feeds into the potential for GPOs in Europe in the future?

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Thank you for those questions. Look, in terms of inflation, what we’re seeing at the moment is inflation in Europe tracking around sort of 3% on food, slightly higher in North America, and around 4.5% on labor, and slightly higher again in North America. So around about a point of delta in the aggregate between the two regions. Obviously, we manage to mitigate some of that before we take pricing. At present, we probably expect to see those trends continue. We continue to see upward pressure on minimum wage, upward pressure on labor supply. Obviously, we’re seeing both labor, those higher labor levels feed into food conversion costs, as well as seeing the impact of, to a degree, a little bit of the tariffs in North America on the food supply system. Again, all of that, we think, is fine. We can manage inflation at those levels.

We will take some pricing accordingly. It goes back to my earlier point that when we see those levels of inflation, we’re able to differentiate our offer to that of the high street because we believe we can deal with it for the reasons we’ve explained to you on previous calls, with greater rigidity than the high street and many of our competitors. In terms of Vermat’s position in other sectors, yeah, it has some operations in sectors that aren’t typical to us today. It’s a very small part of what they do. They’re very attractive businesses.

It’s part of what Petros referenced earlier, their heritage of having been a high street restaurateur, which actually is what we believe gives them their sort of culture and attributes, which are slightly different to what we have, and actually is the history of both Restaurant Associates in North America and leaving sports and leisure in North America. We think it is attractive, and it may give us opportunities that we haven’t hitherto seen in other parts of our business.

Petros, CFO/Finance Leader, Compass Group: Maybe one word on compliance. I think you have heard the story in also the deep dive. One of our key KPIs is making sure we channel our purchasing through the best commercial deals. We’ll continue to do this. The interesting fact about Vermat is the CEO, Rick. The first years of his career was in purchasing within the business. So he’s very, I would say, knowledgeable about this, which gives us a very nice opportunity as we go through the integration, starting with the regulatory approval to capitalize the opportunities there. You will continue to see Dominic talk about international business growing margin faster than North America. One of the key drivers there is improved compliance and purchasing excellence.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): That’s great. Thank you very much. Thank you. This was the last question today. With this, I’d like to hand the call back over to Dominic Blakemore for closing remarks.

Dominic Blakemore, Group Chief Executive Officer, Compass Group: Thank you very much. Thank you all for joining us today. As you’ve heard, we’re both excited about our underlying trading performance, the performance of recent acquisitions. We are very excited by the announced acquisition of Vermat today and everything that that can bring to our European business. We look forward to speaking to you in November with our full-year earnings update. Thank you.

Various Analysts, Analysts, Multiple (Morgan Stanley, BNP Paribas, etc.): Thanks.

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