Photobooths-to-laundry machines operator Me Group (LON:MEGP) recently cut FY26 profit guidance following a weak April performance. This reflected a slowdown in the French photobooth and laundry businesses as the Middle East conflict knocked consumer confidence in Me Group’s most profitable market.
However, Me Group’s shares rallied today after it reported a return to more normal trading patterns in H2-to-date.
Sales improved materially in May and June. And the FTSE 250 firm remains on track to meet downgraded FY26 expectations for pre-tax profits in the £69 million to £74 million range.
What does ME Group do?
Me Group is an international market leader in automated self-service equipment aimed at the consumer market. Currently, it has over 49,000 vending units in operation.
The company is Europe’s market leader in technology enabled photobooths. Me Group also has a fast-growing unattended laundry division.
The firm benefits from long-term contracts with major site owners in high-footfall locations. Partners include supermarkets, petrol forecourts, shopping malls, transport hubs as well as administration buildings.
Positive revenue trend resumes
April’s slowdown in vending revenue was mainly driven by a reduction in photobooth activity in a small number of countries. But the reassuring news is Me Group has seen a return to more normal trading patterns in H2-to-date.
Total vending revenue for May 2026 was 11.1% higher than May 2025. Wash.ME and Photo.ME vending revenues increased 25.9% and 1.8% respectively. And this positive revenue trend continued in June.
Results for the half to April revealed group revenue marginally up 0.3% at £154.3 million. Pre-tax profit was down 3.8% at £32.7 million.
H1 growth was driven by the resilient laundry operations, with Wash.ME vending revenue rising 16.3% to £54.8 million. Me Group installed 499 net new laundry machines in H1. And roughly 800 installations are planned for H2, leaving Me Group on track to achieve its FY26 target of 1,300 installations.
Asda deal excites
During H1, the company secured the largest partnership deal in its history, with UK supermarket Asda, to install and operate laundry machines across its sites. Me Group also entered into its first partnership with Aldi in Europe, initially piloting laundry and photobooth machines at Aldi supermarkets in Austria.
Like-for-like sales in the photobooths business fell by 6.8%, mainly due to a regulatory change in Germany. On the positive side of the ledger, Me Group has renewed two key contracts with French state-owned transport groups SNCF and RATP. These long-term contracts generate more than £9 million of revenue per annum.
What did the CEO say?
CEO Serge Crasnianski commented: ‘Despite a challenging end to the period, largely driven by the ongoing Middle East conflict, I am pleased that the group has continued to make good strategic progress as we continue to diversify and evolve the business mix, with laundry operations now contributing more than 38% of group revenue and 54% of group EBITDA.’
He added: ‘The group continues to invest in core activities of laundry and photobooth services. Innovation and diversification remain a key part of our strategy, ensuring that we continue to meet the needs of our consumers every day, as evidenced by the recent rollout of our new dog-wash machine.’
There is a lot to like about Me Group. This unique asset on the London stock market may appeal to recovery investors. Bull points include its product innovation, sticky revenues, strong balance sheet and exciting long-term growth plans.
Healthy cash generation is funding the establishment of hundreds of new machines every year in the laundry sector as well as investment in photobooths and new activities. Not to mention earnings-enhancing share buybacks.
April’s growth slowdown appears to have been a temporary blip. As Canaccord Genuity explained: ‘The more normal trading seen in May has continued through June, confirming that April’s softness was a one-off rather than the start of a trend.’
And there is considerable long-run growth potential in the laundry business, where Me Group has a strong pipeline of installations with the likes of Asda, Morrisons, MFG, Aldi, Shell (LON:SHEL) and Lidl.
Based on Peel Hunt’s FY26 estimates, Me Group offers value on a single digit price-to-earnings ratio with a near 7% dividend yield. The broker’s 230p price target implies the stock could double from current lowly levels.
Read the press release here: https://me-group.com/results-and-reports/
