Johnson Services back in profit

DRY cleaning group Johnson Services has returned to profit as it sees the benefit of cost cutting measures introduced last year, and will pay a dividend for the first time since 2006.

Shares rose 10.5p on the news to 23.75p.

Pre-tax profits for the Liverpool company stood at £5.4m for the year to the end of June, compared with a loss of £7.5m a year earlier.

This figure was boosted by a £2.2m credit (2008: £5.6m charge) because of a reduction in the group’s pension liabilities. And the company did not have to contend with the £6.4m restructuring charges it had last year.

However, turnover was down 7.7% to £120m compared with £130.1m a year earlier.

John Talbot, executive chairman of Johnson Service Group, said the company had traded well in challenging market conditions.

The dry cleaning division, which includes Johnson Cleaners, Jeeves of Belgravia, and industry supplier Alex Reid saw revenue fall 10% to £41.3m (2008: £46.1 m). High-end brand Jeeves of Belgravia, which operates within London, has been particularly affected by reduced high street spending.

The number of stores across the dry cleaning division fell from 523 stores at the end of December to 512 stores at the end of June. This is because the company exited from 14 under-performing stores and opened three new locations. The company added that seven new locations are planned for the second half of the year.

Mr Talbot said the dry cleaning business had performed ahead of expectations, despite the depressed state of the high street, as the company managed costs and continued to invest in its environmentally friendly GreenEarth stores.

He said: “We feel very positive about our dry cleaning business which has performed strongly in managing its costs and capturing market share where it has started to capitalise on our advantages in terms of the environmental impact of our cleaning process.”

Turnover in the textile rental division, which includes Johnsons Apparelmaster and Stalbridge Linen Services, reduced by 5.3% to £57.6m (2008: £60.8m).

However, revenue in its facilities management division was 1.4% higher at £14.5m (2008: £14.3 million).

Mr Talbot said: “SGP, in the facilities management division has had a good first half in terms of new contract wins, although there has been no upturn from Agency or Capital projects.”

The company reduced net debt to £75.5m. Its bank facility, which runs to December 2010, stands at £104.5m and will reduce to £98.5m by the end of the second half.

Johnsons will pay an interim dividend of 0.25p a share, the first dividend it has paid since 2006.