Workwear group to return to dividend payments as market conditions stabilise

Johnson Service Group, the Runcorn-based workwear and hospitality industry textile business, announced its intention to return to paying shareholder dividends following an improvement in trading conditions.

The group, which serves workplaces and the hotel, restaurant and catering (HORECA) sectors, made the announcement ahead of today’s annual general meeting.

It said: “Volumes are continuing to improve to what we expect to be more predictable and normal levels. Reflecting this expectation, it is the board’s current intention to re-commence dividend payments at the time of the interim results announcement in September 2022.”

In March this year the group announced it had returned to annual profit after a challenging time due to COVID-19 lockdown restrictions. The business was impacted by the closure of restaurants and hotels, a key part of its customer base, during lockdown periods.

Today, it said workwear volumes remain stable, leading to like-for-like revenue growth in excess of three per cent compared with the first quarter of 2021.

In HORECA the volumes in January and February were 70% and 85%, respectively, of normal conditions. Volumes improved further in March to 89% of normal while like-for-like revenue in the month, compared with 2019, was up 1.2%.

Volumes continued to increase in the first half of April, averaging 91% of normal.

The group said its customers are expecting a strong summer season and Johnson has plans in place to ensure its processing capacity can meet this increasing demand.

In addition, it said there is an encouraging pipeline of new business opportunities comprising both new openings from existing customers as well as new customers.

Linked to this, its major capital investment projects at its Belfast site and its largest linen plant, in Bourne, are nearing completion.

The company said: “Inflationary pressures remain but energy costs, in particular, have currently receded from the highs of early March.

“Some 87% of our anticipated gas requirement for the remainder of this year is fixed at prices significantly below the current day ahead rate. We have secured price increases across our customer base which will offset the cost inflation that we are experiencing in the current environment and we will continue to take appropriate mitigating actions as necessary.

“We remain confident in our medium and long term growth prospects.”