Sterile equipment specialist Synergy Health (SYR) is back on track. Despite a lack of improvement in economic conditions, particularly in Europe, a strategy to internationalise the company is paying off.
Synergy's target to generate 50 per cent of revenues outside of the UK and Europe is looking more realistic, with a quarter of group revenues now coming from the Americas, Asia and Africa. Specifically, high-value contracts in the US, coupled with restructuring efforts in Europe, contributed to a 50 basis point improvement in operating margins to 16.1 per cent and a 13 per cent rise in pre-tax profit to £43m.
But the linen business in the Netherlands, which has long been in a state of decline, continued to impact growth in Europe. Sales at the Dutch unit fell 11 per cent at constant currency, masking otherwise positive results in Europe, where a better mix of applied sterile technologies (AST) pushed operating profit up 20 per cent to £20m.
A slew of new contracts worth a collective £43m are planned for the next 16 months and the post-period end acquisition of Bioster Group for €29m (£24m) is expected to win new AST business in Italy and eastern Europe.
Broker Investec Securities expects pre-tax profits of £61m for the current financial year, giving EPS of 76.2p (from 70.6p in 2013).
SYNERGY HEALTH (SYR) | ||||
---|---|---|---|---|
ORD PRICE: | 1,303p | MARKET VALUE: | £767m | |
TOUCH: | 1,302-1,306p | 12-MONTH HIGH: | 1,437p | LOW: 991p |
DIVIDEND YIELD: | 1.7% | PE RATIO: | 23 | |
NET ASSET VALUE: | 584p** | NET DEBT: | 43% |
Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2010 | 286 | 24.5 | 40.6 | 13.2 |
2011 | 287 | 36.7 | 52.1 | 15.8 |
2012 | 312 | 32.5 | 44.5 | 18.0 |
2013 | 361 | 38.0 | 53.0 | 20.7 |
2014* | 380 | 42.9 | 57.8 | 22.8 |
% change | +5 | +13 | +9 | +10 |
Ex-div: 6 Aug Payment: 4 Sep *For the year to 30 March **Includes £265m of intangible assets, or 450p a share |