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Franchise Brands’ first-half profits pushed higher by Metro Rod

Franchise acquired Metro Rod a couple of years ago, and it is now starting to reap the reward of its hefty investment in the business

metro rod workers
Growth at Metro Rod and ChipsAway more than offset slowdowns at OvenClean and Barking Mad

A strong showing from its Metro Rod drain care and repair business helped profits at Franchise Brands PLC (LON:FRAN) soar in the first half of the year.

Pre-tax profit rose 27% to £1.8mln (H1 18: £1.4mln) in the six months ended 30 June, on revenue of £20.1mln (H1 18: £16.8mln) – a 19% year-on-year increase.

READ: Franchise Brands ready to add to network as Metro Rod beds in

Metro Rod, which Franchise acquired two years ago, was the standout performer, with sales growth accelerating to 15%. Underlying earnings jumped by 44% to £1.73mln (H1 18: £1.20mln).

Car body repairer ChipsAway also saw earnings rise in the period, more than offsetting drops in profitability at OvenClean and dog groomer Barking Mad.

Both OvenClean and Barking Mad recruited fewer new franchisees in the half, while the latter has also been reorganised following the departure of the founder.

Given the surge in group profits, Franchise has upped its interim by 43% to 0.30p per share (H1 18: 0.21p).

Franchise recruitment picking up

“Franchise Brands has delivered a strong performance in the first half of 2019 driven primarily by Metro Rod's accelerating rate of growth,” said executive chairman Stephen Hemsley.

“We have made significant progress with our strategy at Metro Rod and have begun to realise the benefits of our investment in infrastructure - in particular IT - that is starting to unlock sales growth, efficiencies and improved customer service, enhancing both corporate and franchisee profitability.

He added: “All of our profitable, cash generative B2C brands have seen a substantial improvement in franchise recruitment compared to the challenging second half of last year and ChipsAway is increasingly well-positioned for the rapid changes underway in the automotive sector in particular in relation to ADAS and the growth of electric and hybrid vehicles.”

Looking ahead, Hemsley said he “remains very positive” on the outlook for the business and expects to deliver “further significant growth” in the current year and beyond.

Quick facts: Franchise Brands PLC

Price: 104.4 GBX

AIM:FRAN
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Market Cap: £99.97 m
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