Multi-brand franchise business Franchise Brands (FRAN:AIM) posted a positive third quarter trading update thanks to a ‘steady recovery in trading’ and said it was confident of meeting market forecasts for revenues and operating earnings for the full year.

Shares climbed 5% to 96.5p while the rest of the market struggled with the FTSE 100 benchmark down 1.8% by mid-morning.

In its business-to-business or B2B division, which provides national drainage, plumbing and pumping services and includes Metro Rod, Metro Plumb, Willow Pumps (acquired in October last year) and Kemac, third quarter sales were down just 6% last quarter against a 30% drop in activity in the second quarter.

Better still, the exit rate at the end of September was plus 9%, and as revenues have been weighted towards higher margin work gross profits also performed better last quarter.

The business-to-consumer or B2C division had a more mixed third quarter. Chipsaway, its mobile car paintwork repair business, and the Ovenclean domestic oven cleaning business both traded at pre-coronavirus levels with strong growth in franchisee recruitment.

Barking Mad, which provides dog home boarding services while owners are away on holiday, struggled as more customers stayed at home this summer due to government travel restrictions and saw franchisees leave the brand.

However, thanks to the strong exit to the third quarter and continued positive trading this month, the board is confident of hitting the market’s full year consensus targets of £48.6 million of revenues and £6.1 million of earnings before interest, taxes, depreciation and amortisation (EBITDA), even with a ‘second wave’ of Covid infections looming.

Executive chairman Stephen Hemsley said he was ‘optimistic for the future growth and prosperity’ of the business while the group's strength 'provides a platform for organic and acquisitive growth as the economic environment recovers from the pandemic.’

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Issue Date: 28 Oct 2020