Textile rental and cleaning specialist Johnson Service (JSG) was never going to escape unscathed from Covid-19. There was a “rapid and substantial” hit to the ‘hotels, restaurants and catering’ (Horeca) segment, where volumes plunged to just 3 per cent of normal seasonal levels at the end of March. With the majority of processing plants closed during lockdown, the Horeca business swung to a £19m adjusted operating loss in the six months to 30 June, versus a £13m profit a year earlier.
Following the easing of hospitality restrictions, the group commenced a phased reopening of Horeca sites to match demand. While volumes remain depressed, they improved to 45 per cent of normal levels in August. This reflects the rise in rural ‘staycations’ but also subdued activity in big cities due to a lack of international tourism and office workers.
Over in the workwear division, while volumes dropped – there was a 12 per cent dip in April – revenue and adjusted operating profit fell by just 4 per cent year-on-year, to £65m and £12m, respectively. This tempered Johnson Service’s overall adjusted operating loss in the first half to £10m.
Benefitting from an £83m equity placing, net debt came down from £128m at the start of the year to £40m at the end of June. While the group generated £39m of adjusted free cash flow, there’s no interim dividend and it is not expecting to declare a final payout either.
House broker Investec anticipates a £12m adjusted operating loss for the full year, recovering to a £36m profit in 2021.
| JOHNSON SERVICE (JSG) | ||||
| ORD PRICE: | 108p | MARKET VALUE: | £ 480m | |
| TOUCH: | 108-109p | 12-MONTH HIGH: | 226p | LOW: 77p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 12 | |
| NET ASSET VALUE: | 63p* | NET DEBT: | 14% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 167 | 15.2 | 3.3 | 1.15 |
| 2020 | 115 | -18.6 | -4.2 | nil |
| % change | -31 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes £163m in intangible assets or 37p a share | ||||
