Berendsen's top line flatlines

Unfavourable currency movements prevented Berendsen from achieving like-for-like (LFL) revenue growth in the first quarter but did not stop it from boosting its operating margin.

The workwear and wash-room services firm's top line was unchanged from the first quarter of 2011, but once you strip out currency effects the group enjoyed a 2% year-on-year rise in underlying revenue, in line with its expectations.

The company also said it delivered an encouraging improvement in operating margin although it experienced slightly higher interest costs due to the signing of a new revolving credit facilities in July last year to secure long term funding. Reported profit before tax for the quarter was moderately ahead of last year.

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The Workwear business continues to make steady progress overall, with some pockets of stronger growth emerging. The Facility business is seeing good levels of revenue growth and the UK Flat Linen businesses are delivering in line with expectations, although the first quarter is typically the firm's slowest. The company said the Manage for Value businesses have responded well to the challenges of improving margins and generating cash.

Free cash flow was strong during the period, with net debt below £500m and bank facilities over £800m.

"We have made a solid start to the current year with trading in line with our expectations and the board believes that the group is well positioned to achieve further growth," the firm said.

The share price fell 1.15% to 515.50p by 08:52.

NR