Laundry firm Berendsen's first-half profit rises 8 pct

* First (Other OTC: FSTC - news) -half profit rises 8 pct to 50.6 mln stg

* Cautions currency fluctuations to impact full-year results

* Expects full-year margins to improve by 20-40 bps (Adds CEO, analyst comments, details, updates share movement)

By Esha Vaish

Aug 29 (Reuters) - Commercial laundry company Berendsen Plc (LSE: BRSN.L - news) reported a tepid 8 percent rise in first-half profit but said it expects a year of "good underlying progress" as cost cuts and efforts to boost productivity take effect.

The company, which also rents linens and uniforms, made a number of investments in the first six months to improve operations, and signed up procurement contracts at lower rates amid a slump in consumer spending that hurt business for its clients.

Berendsen, which counts Coca-Cola Europe, Tesco Plc (Xetra: 852647 - news) and Airbus Group NV among clients, blamed a strong pound and weakness in European currencies for a 1 percent drop in revenue to 517.3 million pounds in the first half ended June 30.

Excluding the impact of currency fluctuations, revenue grew 3 percent.

"We still see opportunity to not only improve our operational performance, but also the margin in some of the company's (markets) where we are doing less well than our best practice countries," Chief Executive Peter Ventress told Reuters.

Ventress said he expected margins to improve by 20-40 basis points across Berendsen's business this year.

Berendsen cautioned the currency translation would continue to hurt results but said its underlying progress would be in line with the expectations.

"Foreign exchange, investment and above the line one-off costs are masked in first-half by underlying operational improvement and market effectiveness," Oriel Securities analyst Hector Forsythe said.

"Second-half will see smoother progress."

CURRENCY HEADWINDS

Berendsen, which reports its results in pounds, in February cautioned that weakness in the euro, the Danish krone and the Swedish krona could weigh on its results.

The pound rose more than 3.3 percent against the dollar in the first six months of the year.

UBS (NYSEArca: FBGX - news) analysts said they expected Berendsen's full-year revenue to take a 2.2 percent hit due to currency fluctuations.

Analysts on an average are expecting revenue of 1.06 billion pounds for the full year, according to Thomson Reuters I/B/E/S.

In the first half, Berendsen's pretax profit rose to 50.6 million pounds ($83.90 million) from 46.7 million pounds a year earlier.

The company took a 1.2 million pound hit due to one-off costs associated with the closure of a laundry plant in the United Kingdom as well as start-up expenses related to its flat linen business outside the country.

First-half operating margin across Berendsen's core businesses - Workwear, Facility and UK flat linen - rose to 18.5 percent before amortisation of customer contracts, from 18.2 percent a year earlier.

Group operating margin improved by 10 basis points to 13.9 percent.

Berendsen raised its interim dividend to 9.5 pence per share from 8.8 pence.

At 1143 GMT, Berendsen's shares were down 1.1 percent at 1078 pence on the London Stock Exchange (Other OTC: LDNXF - news) . ($1 = 0.6031 British Pounds) (Reporting by Esha Vaish in Bangalore; Editing by Feroze Jamal)