Tough conditions in Berendsen's (BRSN) European markets, as well as the strong pound, pushed the workwear-to-washroom group's revenues down a shade in the first half. Yet that masks a self-help story that supported a 30 basis point increase in the underlying operating margin to 13.9 per cent.
At the core workwear division, which rents out protective clothing, the operating margin rose half a point to 18.2 per cent, thanks to productivity improvements in the UK and Germany. Berendsen’s flat linen business, which provides hotels and hospitals with sheets, is also delivering efficiency gains. That included the consolidation of the Chesterfield plant into the Leicester and Wednesbury facilities, even as contract wins helped it grow UK revenues by 3 per cent. Flat linen’s operating profit from outside the UK, however, fell 26 per cent to £6.3m, partly due to pricing pressure in Germany and Sweden.
Meanwhile, revenue at the facility division - washroom products, doormats and cleanroom clothing - rose 5 per cent in constant currency terms. With a significant proportion of Berendsen’s mat and washroom customers yet to take on a fully outsourced service, management are hopeful that growth could pick up further. The division’s central European businesses are also delivering rapid growth - though the contribution remains modest.
Broker Oriel Securities expects full-year pre-tax profit of £143m, giving EPS of 63.6p (from £136m and 59.8p in 2013).
BERENDSEN (BRSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,069p | MARKET VALUE: | £1.84bn | |
| TOUCH: | 1,067-1,069p | 12-MONTH HIGH: | 1,145p | LOW: 859p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 292p* | NET DEBT: | 79% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 522 | 46.7 | 21.0 | 8.8 |
| 2014 | 517 | 50.6 | 23.1 | 9.5 |
| % change | -1 | +8 | +10 | +8 |
Ex-div: 10 Sep Payment: 10 Oct *Includes intangible assets of £442m, or 256p a share | ||||
