ALTHOUGH trading at textile services group Berendsen was positive in the first half of the year, its financial figures were impacted by the weak euro.
The firm, which handles textiles for hotels, hospitals and businesses, saw pretax profits fall to £48.5 million from £50.6m in the first half but it did increase its dividend by 5 per cent to reflect underlying operational growth in the company.
Although at the time of the figures the company said adverse currency issues were likely to persist, it said it “expects to achieve a further year of good underlying progress in 2015”.
Analyst Andrew Brooke at RBC Capital Markets believes an upcoming strategy update and a continuation of good trading will see the market revisit the stock.
“We believe second half trading will have remained sound, with the potential for some organic revenue growth improvement,” he commented.
Although the introduction of the living wage in the UK remains an issue, Brooke pointed out it will only add around 2 per cent to the UK cost base and he believes it can largely be mitigated.
New chief executive James Drummond will update on the strategy on 19 November.
Although Brooke said he doesn’t expect “any revolution” he believes there will be a “slightly more aggressive attitude to growth initiatives from both an organic and acquisitive perspective”.
With relatively low net debt he also believes there is clear scope for takeover deals.
“We would expect these to be focused at the bolt-on end but would not rule out a larger deal,” he said.
He has upgraded his rating on the shares to “outperform” and set a 1,125p target price.
»HOME shopping group N Brown saw profits fall in the first half of the year despite sales rising. Analysts at Investec believe the shares are worth holding, citing tangible results delivered by chief executive Angela Spindler’s transformation programme with improved online trading and strong growth at a number of key brands.
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