Promising first half bodes well for textile and workwear business
Runcorn-based workwear and hospitality industry textile business, Johnson Service Group, has returned to profit and payment of dividends to shareholders, and said it expects its full year results to be in line with market expectations.
Its interim results for the six months to June 30, 2022, showed revenues of £176.2m, up from £99.6m the previous year, while a pre-tax loss last year of £13.9m was turned into a pre-tax profit of £5.1m for 2022.
The board also announced the reinstatement of a progressive dividend policy with an interim dividend of 0.8p per share.
Net debt, including IFRS 16 liabilities, at June 2022, was £57.7m, compared with 60.1m at December 2021.
The group achieved a new £85m bank facility until August 2025, and has announced its intention to launch a share buyback programme of up to £27.5m.
Johnson said it enjoyed strong commercial momentum in its HORECA (hotel, restaurant and catering) division with volumes continuing to recover as hospitality returns to more normal and predictable levels. Second quarter volumes were at 91% of the 2019 level.
The group continued to secure and implement price increases across its customer base to mitigate the impact of inflationary pressures on its cost base, and said the impact of energy price increases is being proactively managed.
There is increasing sales activity and a strengthening pipeline of new business enquiries, and continued capital investment across the group estate to increase efficiencies and underpin capacity.
Progress has also been made on the group’s sustainability agenda.
Chief executive, Peter Egan, said: “During the six month period we have achieved a significant improvement in the group’s financial performance and are focusing on capital investment across the estate to improve energy and production efficiencies and underpin capacity, alongside implementing mitigating actions to seek to address current and future inflationary pressures.
“Our organic growth is underpinned by increased sales activity and a strengthening pipeline of new business enquiries, whilst our strong balance sheet and cash generation means that we remain well placed to pursue earnings accretive acquisitions.”
He added: “Reflecting our strong performance and resumption of more normal levels of cash generation, we have today announced the recommencement of our progressive dividend policy and our intention to launch a share buyback programme of up to £27.5m.
“Trading momentum since June 2022, has remained encouraging, with volumes in HORECA for the six weeks to the middle of August increasing to 92% of normal.
“Nevertheless, and despite implementing material price increases across our customer base, we do expect some margin pressure in the short term, particularly in respect of energy costs.
“However, based on our assumption that volumes follow the normal seasonal pattern over the coming months and are not impacted by a reduction in discretionary spending, or a further material deterioration in the energy markets, as a result of ongoing economic factors, we expect the full year outturn to be in line with current market expectations.”
