Keeping London Underground uniforms spick-and-span was a major contract win for industrial cleaner Berendsen (BRSN) last year, and when combined with the benefits from a 2011 restructuring this helped profit margins to a 10-year high at 14.8 per cent. This beat market expectations, leading to broker upgrades as Berendsen report adjusted profit before tax up 7 per cent to £120m. The shares hit record highs, too, and the board rewarded investors with a 9 per cent dividend increase.
Peter Ventress, chief executive, said he is confident of further margin improvement and growth in the year ahead. Revenues in Berendsen's core operations - workwear, facility and UK flat linen - edged ahead 1 per cent to £697m, but efficiency gains improved margins and operating profits increased by £7.4m to £131.5m. Management have placed lower growth healthcare operations in Denmark, Sweden and Germany into a "Manage for Value" division. Restructuring efforts last year meant operating profits here were largely unchanged at £23.9m despite revenue falling 5 per cent.
Berendsen has also been working its assets harder with return on invested capital up from 7.9 per cent to 8.5 per cent, and free cash flow jumped a third to £125m, bringing net debt down 10 per cent to £463m. Post results, house broker Oriel Securities edged up adjusted pre-tax profits forecasts to £126.8m, giving EPS of 55.5p (from EPS of 52.2p in 2012).
BERENDSEN (BRSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 690p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 688-690p | 12-MONTH HIGH: | 694p | LOW: 458p |
| DIVIDEND YIELD: | 3.7% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 284p* | NET DEBT: | 94% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 954 | 60.4 | 24.5 | 20.0 |
| 2009 | 971 | 61.7 | 26.6 | 20.0 |
| 2010 | 986 | 34.6 | 12.9 | 21.2 |
| 2011 | 992 | 79.3 | 33.8 | 23.4 |
| 2012 | 985 | 94.9 | 42.8 | 25.5 |
| % change | -1 | +20 | +27 | +9 |
Ex-div: 10 Apr Payment: 3 May *Includes intangible assets of £501m, or 291p per share. | ||||
