Rising cooking oil prices provides sizzling outlook for Franchise Brands
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Franchise Brands forecasts revenue forecast as rising cooking oil prices fuel blistering performance
- Commercial drainage specialist Metro Rod experienced robust trading in UK
- Kitchen service provider Filta delivered strong performance in North America
- Based in Macclesfield, the company operates a network of approximately 600 franchisees
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Franchise Brands now expects annual revenues and profits to exceed forecasts as a result of the healthy performance of the two largest companies.
The AIM-listed company said kitchen service provider Filta had performed very strongly in North America, while commercial drain specialist Metro Rod had strong trading in the UK.
After acquiring Filta for £49.2 million earlier this year, the group noted that the division benefited greatly from the rising price of cooking oil, which franchisees often collect before selling to other customers.
Deposit money: After acquiring Filta for £49.2m earlier this year, Franchise Brands noted that the division benefited greatly from the rising price of cooking oil
But it’s also driving increased demand for the Filta Fry process, something the company claims can double the length of time cooking oil is used, while the rising dollar pushes profits even further.
At the same time, Franchise Brands noted “continued strong momentum” in sales at its subsidiary Metro Rod, driven by franchisees expanding their service offerings, especially with regard to pump service and maintenance tasks.
As a result, it now expects sales to exceed current market expectations of £92.9m this year, alongside adjusted underlying earnings and earnings per share of over £14.3m and 7.31p respectively.
Stephen Hemsley, the group’s executive chairman, said the result “demonstrates the strength of our growth strategy and the quality of our franchise networks.
“I am delighted that the Filta acquisition has given us a significant international presence in the large franchise-friendly North American market.
“This will greatly expand our capabilities for both organic development and growing B2B acquisitions.”
Services: Franchise Brands operates a network of approximately 600 franchisees in the UK, Europe and North America operating under nine main brands
After the release of the trading update, Franchise Brands Shares was up 7.1 percent to 160.7 pence late Thursday afternoon, though their value has fallen slightly since the start of the year.
Based in Macclesfield, the company operates a network of approximately 600 franchisees in the UK, Europe and North America, operating under nine main brands.
Metro Road and Filta are within their B2B division, as are national plumbing franchise Metro Plumb and water pumping equipment supplier Willow Pumps.
Meanwhile, the B2C branch consists of car paint repair specialist Chipsaway, dog boarding house Barking Mad and household cleaning company OvenClean.
Franchise Brands said the latter division was having trouble finding new franchisees in the UK due to the labor shortage in the country, with vacancies of more than 1.2 million as of October.
The company also owns software developer Azura Group, purchased in November 2021, and home maintenance service The Handyman Van.
However, echoing comments he made when Franchise Brands released its interim results in July, Hemsley said the company remained “highly profitable and cash-generating” with a large misadjusted balance sheet to boot.
He added: “The group is in a solid financial position to face the more challenging economic environment and take advantage of future growth opportunities, both in the UK and the US. I therefore look forward to the future with great confidence.’