The hospital market has been as badly affected by austerity measures as any other area of government spending, and the half-year results for sterile equipment specialist Synergy Health (SYR) again showed that pressure in the european health market has yet to ease. In the circumstances, underlying revenue growth of 9 per cent was better than could have been expected, with most of this generated by recent acquisitions in the US.
This helps explains why revenues in the Americas increased by 81 per cent at constant currency to £41.4m, with divisional operating profits nearly doubling to £4.7m. However, growth in the US was offset by problems in Costa Rica, where the withdrawal of a major customer impacted trading at its applied sterilisation technology plant.
In Europe, the group's linen unit in the Netherlands is still a source of weakness, which coupled with a weaker euro meant that european sales fell by an underlying 6.3 per cent to £59.5m. Meanwhile, UK sales rose by less than 1 per cent on the back of flat volumes in the National Health Service, which is currently struggling with budgetary pressures. Management said Synergy is in the running for a major US sterilisation contract as preferred bidder, but warns that the Dutch business will continue to hit headline sales growth for the rest of the year.
Broker Investec forecasts full-year pre-tax profits of £56.3m and EPS of 71.8p, up from £49.5m and 64.3p in 2013.
SYNERGY HEALTH (SYR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,067p | MARKET VALUE: | £627m | |
| TOUCH: | 1,064-1,067p | 12-MONTH HIGH: | 1,165p | LOW: 920p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 574p* | NET DEBT: | 50% | |
| Half-year to 29 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 171 | 17.7 | 24.9 | 7.90 |
| 2013 | 192 | 21.3 | 28.7 | 8.57 |
| % change | +12 | +20 | +15 | +8 |
Ex-div: 20 Nov Payment: 13 Dec *Includes intangible assets of £269m, or 459p a share | ||||
