Berendsen's (BRSN) full-year returns were overshadowed by operational problems with its UK business, sending the shares tumbling more than a tenth after the textile services provider admitted problems there would continue to affect profitability in 2017. Chief executive James Drummond cited a period of underinvestment in people, plant and machinery, which led the UK business to lag behind its overseas counterparts, and margins to contract from 2013 to 2016.
The group plans to invest around £450m in plant and machinery over the next three years, £200m of which will be focused on the UK. The group is expecting adjusted operating profit for 2017 of £150m, down from this year's £161m result, with profitability split roughly 40:60 between the year's halves.
Domestic operations were generally a drag for the group, but outside this country revenues grew by 3 per cent at constant exchange rates. The healthcare division grew in Sweden and Ireland, but was offset by poor performance from the UK. And it was a similar picture in workwear, where underlying revenues grew 2 per cent to £347m, with growth in Europe offsetting a 1 per cent decline at home.
Analysts at HSBC are forecasting adjusted pre-tax profit of £131m and EPS of 58.8p in 2017 (2016: £140.6m/63.1p).
| BERENDSEN (BRSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 804p | MARKET VALUE: | £1.39m | |
| TOUCH: | 803.5-804.5p | 12-MONTH HIGH: | 1,371p | LOW: 751.5p |
| DIVIDEND YIELD: | 4.1% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 314p* | NET DEBT: | 79% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 0.99 | 92 | 41.3 | 25.5 |
| 2013 | 1.05 | 112 | 49.8 | 28.0 |
| 2014 | 1.04 | 117 | 52.6 | 30.0 |
| 2015 (restated) | 1.02 | 113 | 51.9 | 31.5 |
| 2016 | 1.11 | 120 | 53.3 | 33.0 |
| % change | +9 | +6 | +3 | +5 |
Ex-div: 6 Apr Payment: 5 May *Includes intangible assets of £437m, or 253p a share | ||||
