ME Group confident after strong first half

The FTSE 250 company said profit before tax climbed 10.3% to £30m for the six months ended 30 April, driven by strong performances in the company's core laundry and photobooth segments, despite adverse foreign currency effects.

Excluding currency impacts, revenue grew by 8.6%.

The firm’s Wash.ME laundry segment showed solid growth, with revenue surging 16.7% to £44.1m.

It said the number of Revolution laundry units in operation rose by 18.0%, now accounting for 12.4% of the group's total vending estate, supported by record installations of 420 machines in the first half.

Photobooth operations also showed positive momentum, with the number of Photo.ME machines increasing 12.6% to 30,708 units.

Vending revenue from photobooths grew 2.4% to £85.9m, or by 7.5% when excluding currency fluctuations, following a stronger performance in the second quarter across Europe and the Asia-Pacific region.

ME Group said its operations remained highly cash generative, with cash from operations rising 13.3% to £41.7m.

That supported its ongoing investment in its growth strategy and shareholder returns.

Its balance sheet was robust, with a gross cash position of £82.7m and a net cash balance of £21.7m at the end of the period.

Earnings per share increased 11.8% to 5.97p, and the interim dividend was raised 16.2% to 3.45p per share, totaling £13m to be returned to shareholders.

ME Group maintained a policy of paying annual dividends exceeding 55% of annual profits, subject to market conditions and capital requirements.

Looking ahead, ME Group said it planned to capitalise on significant market opportunities in photobooth and laundry services.

The company said it was aiming to continue its strong pipeline of Revolution laundry machine installations, targeting 80 to 90 units per month, and anticipated a record number of installations in the second half of 2024.

Additionally, the rollout of next-generation multi-service photobooths was on track, with plans to install 2,000 to 2,500 machines by the end of the financial year.

The board said it remained confident in delivering another year of record profitability for 2024, supported by strong trading momentum observed in the early part of the second half, and aligned with market expectations.

“We are pleased to report positive trading momentum throughout the first half of 2024, which has continued into the second half, and reflects further strategic progress from the group's core automated photobooth and laundry operations which are both exceptionally profitable and highly cash generative,” said chief executive officer and deputy chairman Serge Crasnianski.

“The group continues to focus on profitability, returns and cash generation, with these metrics being the key performance indicators for the group.

“The group is on track to deliver another record year across these financial metrics, including the number of machines deployed.”

Crasnianski said that through a “continued focus” on research and development and technological innovation, the group was focussed on exploring new opportunities within the automated self-service instant machine category to further diversify its portfolio, including the planned launch of new machines offering a broader range of services for consumers.

“Additionally, the group's R&D team has devised new production techniques to reduce the cost of the next-generation photobooths by 28%, effective immediately, and the Revolution laundry machine by 13%, effective 2025.

“A new generation solar panel, which delivers twice the power generation of the current model, is also in development and will be utilised by the group's Revolution machines.”

At 0819 BST, shares in ME Group International were down 2.09% at 178p.

Reporting by Josh White for Sharecast.com.