Spotless Lower on Revamp Costs

Sydney, Aug 26, 2008 (ABN Newswire) - Spotless, another company in the growing services sector, saw the market switch tack on its 2009 result, dominated as it was by some deck clearing costs after a restructure.

Reported final profit for the year to June 30 fell 45% to $26 million after one-off items including, costs associated with an organisational restructure.

But underlying earnings were up 13.5% to $57.1 million compared with the 2007 financial year, according to directors.

"Underlying EPS (earnings per share) grew strongly by 12.5 per cent and we are confident this performance provides a clear path for delivering improved results in full year 2009 and beyond," chief executive Jo Farnik said in a statement.

Revenue during the 12 months to June 30 fell 4.2 per cent to $2.4 billion after a decline in retail services sales and the full year impact of a major contract loss.

Underlying earnings before interest, tax and non-recurring items climbed 10.7 per cent higher to $105.1 million.

Once the market had assessed those gyrations and the comments from the company, the shares hit a day's high of $3.36, after touching a low of $2.94. They ended up a solid 9%, or 27 cents at $3.16.

"Following the completion of our strategic review and the identification of opportunities for growth and improved efficiency we undertook deliberate investment in restructuring and this has, and will continue to, deliver strong financial returns," Mr Farnik said.

Spotless said it was confident of growth opportunities across all of its businesses, notwithstanding the uncertain economic environment in the short to medium term.

The company said it expects the strongest growth to come from the group's managed services and cleaning services this year, with modest growth from food services and laundry services.

"Spotless is confident of continued growth in EBIT, NPAT and EPS in FY09, building on the strong foundations laid in FY08. With the restructuring program largely completed Spotless expects no material restructuring costs in FY09.

"Notwithstanding the uncertain economic environment in the short to medium term, Spotless is confident of growth opportunities across all of its businesses.

"Having established an efficient operational and administrative platform, emphasis will shift towards delivering profitable organic growth. In Australasia, solid demand trends remain across all four business lines, despite a subdued New Zealand economy.

"In FY09, Spotless expects growth in all divisions, with the strongest growth in Managed Services and Cleaning Services, and more modest growth in Food Services & Laundry Services.

"The prospect of increasing cost inflation presents challenges in managing the cost base.

"However the strong cost reductions achieved in FY08 position Spotless well in maintaining recent significant improvements in operating margins," directors said in a statement to the ASX.

Spotless declared a final dividend of 10.5 cents per share, taking full year dividends to 21 cents, unchanged on 2007.

The company called off a takeover attempt on rival services provider, Programmed Maintenance Services during the year.


 

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