Potential Buyers for Spotless Laundries Business

You wouldn’t think that a cleaning company would make it into the ASX 200. But Spotless Group [ASX:SPO] is one such company. They reported $1.6 billion in revenue just for the first half of financial year 2016 (FY16). And their services extend to health, laundries, education and many others.

Their slogan is, ‘We’ll take care of it’. But last year in December Spotless dropped the ball. A trading update which stated that net profits would drop by 10% caused a 51.6% drop in shares. But as of this year, Spotless has been working hard to restore shareholder value.

On 23 February, Spotless stated in an announcement that ‘revenue will materially exceed FY15.’ Earnings, with the exclusion of significant items, were expected to exceed FY15 by around 5%. This morning Spotless reaffirmed their guidance for FY16.

In an announcement to the market, Spotless stated that ‘earnings for the financial year ending 30 June 2016 are unlikely to differ materially from its previous earnings guidance’.

Spotless’ share prices opened up 6.6% higher to $1.15 per share.

Spotless Group Share Price

Source: Google Finance

Spotless is still down 47.7% since the drop in December. But they’ve been undertaking a strategy reset to increase growth.

What’s next for Spotless

Spotless is aware of interest in the sale of its laundries business. The company are assessing how this potential sale could affect shareholder value.

The process is still in early stages. And no guarantees can be assured. But it is an interesting turn of events, which might boost shares above $2 again.

Härje Ronngard,
Junior Analyst, Money Morning

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