Berendsen delivers clean set of first-quarter results

Underlying group operating profit was ahead of the equivalent period last year even though investments in the strategic move to a four-business line structure has impacted the operating margin in the short term, as expected. Full year guidance was unchanged.

There was close to 5% underlying growth from Workwear, which represents almost a third of group operating profits, and Facility, which represents just over a fifth.

The Healthcare businesses produced lower revenue in Germany and Austria and lower volumes than expected in the UK, which held back growth by an unspecified amount. A new divisional head has just been appointed, hired from Johnson and Johnson.

But "good growth", again unspecified, was reported from the Hospitality businesses, particularly in Scandinavia, as the divisional management team was said to now be fully in place and a new operational blueprint nearing completion.

Capital expenditure and net debt were both higher as capital allocation was prioritised to the "significant opportunities" perceived in Workwear and Cleanroom, but the FTSE 250 group said free cash flow was strong.

"We expect to convert between 75% and 90% of our profit after tax into free cash flow for the year as a whole," Berendsen said.

Broker Peel Hunt said its pre-tax profit forecasts remained unchanged, still short of consensus £147.0m and earnings per share of 64.8p, though at current currency rates the forex tailwind in 2016 would increase 2016 PBT to around £152.0m, with EPS 67.7p.

"As a steady compounder, we continue to see Berendsen as a low-risk investment over the medium term as self-help measures drive profit progression, even in an unhelpful economic environment," analysts said.