Driver restructuring starts to pay off

Construction disputes and property services provider Driver Group (LON:DRV) lost money last year as management sorted out the problems for its Middle East and Asian divisions. Meanwhile the Europe and Americas division continues to prosper.  

Driver has exited poorly performing businesses, closed offices and reduced the headcount in the problem regions. This has helped to reduce overheads to a level where they should return to profitability. Further savings are planned.

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In the year to September 2022, revenues slipped from £48.8m to £46.9m. while a £2m pre-tax profit was turned into an underlying loss of £1m, after £600,000 of restructuring costs. Net cash was £3.5m. A final dividend of 0.75p is being paid making 1.5p a share the total for the year.

Revenues from Europe and Americas rose from £33.7m to £35.1m. Although the region is profitable the profit contribution fell last year.

This year

House broker Singer has not published any forecasts. This indicates the uncertainty about the outcome for the year, which has started well.

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First quarter revenues are 5% higher at £11.8m, while there was an operating profit of £250,000. Utilisation levels increased from 67.5% to 70%. Net cash has improved to £4.7m.

Driver continues to be profitable during the second quarter. As more of the cost savings come through profit could continue to improve, especially if utilisation levels continue to increase.  

New software will help to make the business more efficient and provide further scope for increasing returns in the future.

The share price recovered 6.7% to 32p, so the yield is 4.7%.

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