Davis' results were in line with brokers' expectations and, thanks to recent cost cutting, the group managed to offset the effects of recession in its UK and continental markets. There should be more of that to come as, under new chief executive Peter Ventress, Davis is undertaking a strategic review - the results should be known later this autumn. The aim will be to focus its market strengths, such as on higher margin workwear and the UK healthcare operations.
Meanwhile the trading picture is mixed – reflecting the pattern of recession and recovery, with the Nordic region seeing the fastest upturn, though Denmark is lagging. The other European countries, however, have yet to see much upturn, with the German healthcare market proving to be especially competitive. Ireland was also badly hit, and UK workwear remains challenging. But the UK hotel linens business is benefiting from a pick-up in the hotel trade and cost efficiencies, while healthcare linen side had continued to perform well, too. But the recent start-up business, decontamination, is taking longer to come into profit than expected.
Broker JP Morgan Cazenove expects adjusted full-year pre-tax profits of £92m, giving adjusted EPS of 39.41p (2009: £92m/39.4p).
DAVIS SERVICE (DVSG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 376p | MARKET VALUE: | £ 642m | |
| TOUCH: | 375-377p | 12-MONTH HIGH: | 442p | LOW: 356p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 256p* | NET DEBT: | 120% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 482 | 29.2 | 12.0 | 6.50 |
| 2010 | 489 | 28.8 | 12.5 | 6.50 |
| % change | +1 | -1 | +4 | - |
Ex-div:15 Sep Payment:14 Oct *Includes intangible assets of £500m or 293p per share | ||||
