Berendsen FY profit and revenue rise but outlook cautious

Commercial laundry company Berendsen posted a rise in full-year profit and revenue but sounded a more cautious note on its outlook as it said it will continue to be affected by legacy issues.

For the year to the end of December, adjusted pre-tax profit increased 4% to £140.6m on revenue of £1.11bn, up 2% on the previous year.

Statutory pre-tax profit rose to £120.3m from £113.4m as revenue grew to £1.11bn from £1.02bn.

Meanwhile, the dividend per share was lifted 5% to 33p.

Berendsen said its second half performance was hit by legacy issues in UK textiles, where profits were down £10m compared to the previous year.

The company guided to 2017 adjusted operating profit of £150m, which is 12% below consensus of £170m, and said results are expected to be more second half weighted than previously due to the legacy issues in the UK.

Chief executive officer James Drummond said: "2016 was a difficult year for our UK textile operations, but we are confident that the actions we are taking will drive tangible improvements across all aspects of our operations. This will enable us to better serve our existing customers and make the most of the opportunities we see in our markets.

"2017 will be a year of transition: in the first half, we will continue to be impacted by legacy issues in the UK; in the second half, we will start to see benefits coming through from our ongoing investment in plants, people and systems. During 2016 we made significant progress in installing common processes and controls across the group. This will allow greater visibility of the performance across each of our businesses, and will strengthen our ability to share best practice across the group."

Investec said it expects consensus FY17 earnings per share estimates to fall by more than 10%.

Stifel, which rates the stock at 'sell' and had pencilled in 2017 adjusted operating profit of £172m, said the 2016 earnings numbers were in line, but it expects double-digit downgrades to FY17 consensus.

At 0827 GMT, the shares were down 17% to 772p.