Compass points higher amid Covid bounceback
Compass Group shares marched higher as the world’s biggest catering firm bounced back from the pandemic.
The stock rose 4pc, or 66.5p, to 1720p, its highest level since February 2020, just before the onset of the pandemic and lockdown measures sent shares plunging.
The surge came as Compass flagged that revenues for the three months to the end of December were at 97pc of 2019 levels after sales in the period jumped 38.6pc, well ahead of market forecasts.
Compass noted that revenues surpassed 2019 levels across all areas of its organisation except its business and industry unit.
The strong performance was led by its North American market, which generated revenues that were 102pc of the same figure pre-pandemic.
However, the first quarter of 2022 may see ‘some impact’ from the rise of the Omicron variant as corporate clients delayed their return to the office. It added the pandemic was causing some sports and leisure events to be postponed while several schools and other education facilities were extending remote learning. Despite this, the group reiterated its full-year guidance, predicting revenue growth of 20pc to 25pc.
‘[Compass] has recovered well and looks likely to end up stronger post-pandemic than before, not least because of the boost to the overall market size created by the pandemic,’ said Steve Clayton, manager of the Hargreaves Lansdown Select funds.
He added: ‘Managers had too much on their plate to worry about what was going onto their workers’ plates in the canteen.
‘Compass can take that hassle away and often improve the catering offer in the process.’ The FTsE 100 was down 0.7pc, or 54.16 points, at 7528.84 while the FTsE 250 lost 1.3pc, or 281.62 points, to close at 21967.78.
Markets remained subdued as the ongoing cost of living squeeze loomed large. The 54pc hike in the energy price cap announced yesterday is expected to hit consumer spending at a time of delicate economic recovery.
The decision by the Bank of England to raise interest rates to control inflation may ease some of the pain caused by price rises, although the central bank’s prediction that inflation will hit 7.25pc in April spooked traders.
While bank stocks made early gains on news of the rate hike, they reversed course amid fears the pressure on household spending could dent loan demand.
Most managed to stay in the black – but only just. Lloyds ended up 0.8pc, or 0.44p, at 53.3p while Barclays was up 0.7pc, or 1.4p, to 204.45p and Natwest crept up 0.04pc, or 0.1p, to 252.6p.
The prospect of higher mortgage costs hitting housing demand also hit the shares of listed estate agents and property websites.
Rightmove sank 4.5pc, or 29.8p, to 637.6p, purplebricks fell 3.4pc, or 0.7p, to 19.8p and Foxtons dropped 0.9pc, or 0.35p, to 39.45p.
Mining stocks provided upward momentum for the blue-chips amid hopes of strong global demand for commodities such as coal, copper and iron.
Rio Tinto was up 0.4pc, or 19p, at 5374p and Glencore rose 0.25pc, or 1p, to 400.3p.
Meanwhile, bumper results from oil major shell drove shares up 1.4pc, or 27.6p, to 1960p as it raked in profits from booming energy prices. Rival Bp was also up 0.7pc, or 2.85p, to 392.4p.
Mid-cap engineering firm Renishaw climbed 6.7pc, or 308p, to 4900p following record half-year profits. Pre-tax profit for the six months to the end of December came in at £84.2m, up from £43.4m in the same period a year ago, as its saw strong levels of demand for its components, particularly semiconductors and electronics.