Acquisition lifts Taylors result

By Phil Boeyen, ShareChat Business News Editor

Tuesday 26th February 2002

Laundry company Taylors Group (NZSE: TAY) is facing lower margins but an acquisition made early last year has bumped up interim net profit by 28%.

Taylors says it recorded a profit of $1.77 million in the six months to the end of December compared with $1.38 million previously, with sales rising to $26.78 million from $21.44 million the year before.

Chairman, Brian Blythe, says the inclusion of a full six-month's sales for the Laundry and Drycleaning Services business acquired in April 2001 has significantly contributed to the sales growth.

"Without this expansion, the sales growth across the company continues to be impacted by the price sensitivity and competitiveness of the markets in which the company operates.

"The directors see the trend of increasing volumes and lower margins continuing. The sales performance for the period has also been influenced by the margin reductions resulting from the negotiations surrounding the extension to the company's significant contract with a number of Auckland hospitals. "

Operating profit before taxation for the half year rose to $2.8 million, up 31.8% on the prior period and includes additional borrowing costs and goodwill amortisation associated with the LDC acquisition.

"Notwithstanding these additional costs, the net operating profit continues to show positive growth," says Mr Blythe. "Maintaining strong profit growth remains an important target for the company."

Taylors' directors say that the result was largely as expected and overall they are satisfied with the interim performance.

"Directors believe that trading patterns through the balance of the 2002 year will, in the absence of any unforeseen circumstances, remain unchanged, and look forward to a full year improvement on the 2001 result."

The company will pay an interim dividend of 4 cents per share.

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