Cleaning and catering business Spotless has reaffirmed forecasts for a 10 per cent fall in its full year profit due to costs linked to acquisitions and failed tenders.
Spotless' net profit dropped 20 per cent to $48.1 million in the six months to December 31, in line with company guidance.
The profit decline, flagged in December, was largely due to costs related to unsuccessful tenders and issues with the integration of the group's recently acquired laundry businesses and technical and engineering service provider AE Smith.
Group revenue rose nearly 20 per cent to $1.6 billion in the half, while underlying net profit, which removes one-off expenses, was up 14.3 per cent to $64.7 million.
The underlying results have pleased investors who drove Spotless's share price up nearly nine per cent, or 10 cents, to $1.215 at Tuesday's close.
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The company says challenges associated with integrating its recent acquisitions are short-term issues that will be resolved in the current financial year, but is expected to impact the full year result.
Spotless has reaffirmed its full year forecast for net profit to be 10 per cent lower than the $60.2 million made in fiscal 2015.
"Full integration of the laundries acquisitions is continuing to plan and is expected to be completed by June 30," a company statement said.
It said utility service USG, its most significant bolt-on acquisition made last year, was performing well and in line with expectations.
During the half, Spotless said it was awarded a number of new and renewed contracts, valued at more than $400 million in annual revenues.
This includes facilities management and integrated services contracts for BHP Billiton, the NSW land and Housing Corporation, SA Health and GlaxoSmithKline and food and catering contracts for National Australia Bank, BHP Billiton, Telstra and Virgin Brisbane Domestic Terminal.
SPOTLESS PROFIT DOWN ON ONE-OFF COSTS:
* Net profit down 20 pct to $48.1m
* Revenue up 19.3pct to $1.6 billion
* Interim dividend 3.5 cents a share, down from 4.5 cents
