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Catering firm Compass lifts profit forecast after strong first half

FILE PHOTO: Illustration shows smartphone with Compass Group's logo displayed

(Reuters) - British catering firm Compass Group raised its 2024 profit forecast on Wednesday, after reporting first-half earnings slightly ahead of market expectations, as new businesses and higher pricing offset inflationary headwinds.

The world's largest food caterer with operations in over 30 countries expects volume growth to moderate after a boost in the past six months from more workers returning to offices, and sports and leisure events ramping up.

Shares fell 2% in early trading.

"Beyond 2024, we expect to sustain mid to high single-digit organic revenue growth, ongoing margin progression and profit growth ahead of revenue growth," CEO Dominic Blakemore said in a statement.

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Compass' organic revenue for the year is expected to grow towards 10%, compared with analyst expectation of about 9.2%.

"(We) believe the stock can 'work' in what looks set to be another year of macro uncertainties," RBC Capital Markets analyst Karl Green wrote in a note.

French rival Sodexo, which bagged the contract to serve the upcoming Paris Olympics, last month forecast 2024 organic revenue growth at the top of its 6% to 8% range.

Compass, caterer for the likes of Microsoft, Shell and Harvard Business School, expects 2024 underlying operating profit growth towards 15%, from an earlier forecast of 13%.

The London-listed firm has been ramping up acquisitions as it doubles down on core markets.

The company catered the Super Bowl earlier this year and is set to do the same at the Wimbledon tennis championships and Coachella music festival in the summer.

It plans to exit Brazil, it said on Wednesday, following its departure from mainland China, United Arab Emirates, Argentina and Angola in the past six months.

Underlying operating profit rose nearly 19% to $1.47 billion for the six months ended March 31. Analysts had expected $1.46 billion, according to a company-compiled consensus.

(Reporting by Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips and Bernadette Baum)