- First half pre-tax profit up 13.6%
- On track to deliver another record year
- First half dividend up 16.2%
Instant service equipment company ME Group International (MEGP) said it was on track to deliver another record year after reporting a strong first half which saw double-digit profit growth.
The shares gained around 1% to 183.4p taking the gains for the year to 47%, comfortably ahead of the 8% gain in the mid-cap FTSE 250 index.
UNDERLYING STRENGTH
Revenue for the six months to the end of April increased 4.6% to £150.4 million while EBITDA (earnings before interest, tax, depreciation, and amortisation) rose 11.1% to £51.2 million.
Reported growth was masked by strong currency headwinds with the Japanese yen falling 15% against sterling and the euro also down against the pound.
Excluding the translation effect from currencies, revenue and EBITDA increased 8.6% and 14.8% respectively driven by growth in the company’s core laundry and photobooth operations.
The company remains highly cash generative with cash flow from operations up 13.2% year-on-year to £41.7 million, supporting growth investments and returns to shareholders. The first half dividend increased 16.2% to 5.97p per share.
WHAT DID THE COMPANY SAY?
Chief executive and deputy chair Serge Crasnianski commented: ‘We are pleased to report positive trading momentum throughout H1 2024, which has continued into H2 2024 and reflects further strategic progress from the Group's core automated photobooth and laundry operations which are both exceptionally profitable and highly cash generative.
‘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.’
The group said it continues to capitalise on ‘significant’ market opportunities for photobooth and laundry services.
STRONG LAUNDRY ROLL OUT
The company plans to roll-out between 80 and 90 Revolution laundry machines per month in the second half, an increase from the 70 per month averaged in the first half, putting it on track to deliver a record number for the year.
Vending revenue from group-operated Revolution laundry machines increased by 18.4% to £41.2 million (up 20.4% excluding currency effects) taking the division’s share of group revenue to 27.4% from 13.2% in 2023.
Analyst Eleanor Spencer at Berenberg said the expansion of the laundry division remained central to the investment case and she estimated ME Group would roll out around 950 Revolution machines in 2024.
‘We believe the division has a long runway of growth with plenty of scope for estate expansion across key European geographies’, added Spencer.
