Johnson Service has been battling to maintain an operational performance as spotless as one of its laundered shirts, against a very tough economic background. The shares are cheap, but unlikely to re-rate until the outlook improves.
The company felt the effect of slowdown very quickly, so keeping sales growing at all last year was an achievement.
The group's largest division is textile and linen rental for service businesses through its Apparelmaster and Stalbridge subsidiaries. Revenues here were 2.7 per cent higher at £118m, with above-inflation rises in fuel costs keeping operating profits flat at £15.9m. The expanded managed services division was the best performing unit despite its exposure to the high street. Reflecting new contracts wins, revenues and profits both rose 13 per cent, to £38m and £4.1m.
However, the dry cleaning business, which consists of the Johnson and Jeeves of Belgravia brands, was hit by the ups and downs on the high street. "We seem to be acutely sensitive to bad economic news," said chairman John Talbot. "It means that people simply wait a while before taking their suits to be cleaned." That weakness was reflected in a 1.8 per cent decline in divisional turnover to £77.3m and flat profits of £2m.
Investec forecasts 2012 EPS of 4p (2011: 4.2p).
JOHNSON SERVICE (JSG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 28p | MARKET VALUE: | £ 72m | |
| TOUCH: | 27-29p | 12-MONTH HIGH: | 36p | LOW: 25p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 29p* | NET DEBT: | 67% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 406 | -52.4 | -75.8 | nil |
| 2008 | 252 | -6.8 | -3.4 | nil |
| 2009 | 236 | 20.6 | 6.1 | 0.75 |
| 2010 | 235 | 4.2 | 1.3 | 0.82 |
| 2011 | 242 | 13.7 | 4.1 | 1.00 |
| % change | +3 | +226 | +215 | +22 |
Ex-div:18 Apr Payment:18 May *Includes intangible assets of £95.4m, or 37p a share | ||||
