Davis Workwear delivers stable performance in UK & Ireland
The Board of The Davis Service Group Plc (''the Group'') issues its interim management statement which covers the period since 1 January 2009, prior to holding its AGM.
In the first three months of 2009 the Group achieved 8% growth in revenue, with a modest improvement in operating profit, compared to the same period last year. These results benefited from foreign exchange translation, with revenues broadly flat at constant exchange and operating profit approximately £1million lower. Interest costs were higher than last year, with the effect of foreign exchange offsetting the lower interest rates. Our free cash flow is ahead of the same period last year benefiting from tight management of capital expenditure.
The market conditions for Nordic region outlined in our 26 February 2009 announcement have continued. In Denmark, our broad customer base, much of which is relatively defensive, is delivering a balanced performance and in Norway, although the pace of growth has slowed considerably, we are still finding market opportunities. Sweden is our most challenging market for both textile maintenance and direct sales operations with no sign of the pressures in the economy easing in the short term. The Baltic States and Finland, while small, are making progress despite challenging economic conditions.
Holland and Poland and our German Workwear business are holding up well and we are working hard to absorb the pressure on volumes from the reductions in customer employment levels. German Healthcare will remain a challenging market for some time, but we are starting to see the operational benefits from restructuring actions. Austria remains stable and the Czech Republic is progressing.
UK & Ireland
As expected, the fall in hotel volumes impacted the first quarter result but we are reducing costs and holding our pricing. Healthcare continues to grow well. Workwear delivered a stable performance, benefiting from a high level of new contract wins, but it is experiencing pressure on underlying volumes. We are nearing completion of the construction of the new decontamination centres which will commence operation later this year. We are taking robust action in Ireland where the market has become progressively more challenging.
We maintain a strong balance sheet and our debt is committed for periods of up to nine years, with significant facilities undrawn.
The Group is meeting the demands of the current testing environment and is taking action in the parts of the business that are most directly affected. We are focused on maintaining the strong cash generation of the business, in particular by managing capital expenditure. Performance in the first quarter of the year has been resilient and while the remainder of the year will be challenging, the Board expects to deliver a satisfactory outcome for the year.
Davis Service Group is a focused European textile maintenance business with leading positions in most of the countries in which it operates. As a focused business we are able to mobilise our resources to drive our strategies in our core area of expertise.
Davis Service Group plc