Textile and workwear company Johnson Service Group (JSG) said revenue rose in the first six months of 2024, with operating profit up by almost a third.
The company, which acquired Irish-based Celtic Linen last year, also announced further expansion of its business, with the £20.6 million (€24.4 million) acquisition of Empire Linen Services. The deal allows the company to expand its service offering to luxury hotels in London and the southeast of England, targeting four- and five-star hotels in the area.
Chief executive Peter Egan said the Celtic Linen business was meeting expectations. “We’re very pleased with the acquisition and the integration has gone very well, it’s in line with what we expected,” he said.
“Hospitality has been generally in line; yes, there’s been a little bit of softness in some parts of the region. The market is a little competitive, as it is in areas of the of the UK, but generally, it’s been in line.”
Healthcare volumes are also “quite stable”, he said. “The key here for both horeca [hotel, restaurant and catering] and healthcare is a strong focus on consistent supply.”
Organic revenue rose 5.7 per cent compared to the first half of 2023, while overall revenue rose 13.5 per cent to £244.1 million for the six-month period.
At the same time, energy costs as a percentage of revenue fell during the period, with costs largely fixed for the rest of the year.
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“Energy has continued to reduce costwise, but it’s not back to where it was pre the significant increase,” said Mr Egan. “From a labour perspective, both in the UK and Ireland, rates continue to go up. The key for us is to ensure that we have run efficient plants, we invest well in our plants, our management and our people and help offset those cost increases.”
JSG said new sales activity had increased and there was a strengthening pipeline in both horeca and workwear. The hotel and catering sector showed growing volumes despite the unseasonably poor weather in the second quarter, as more rooms were serviced and patterns became more predictable. Workwear remained stable during the first half of the year.
Margin improvement was also on track for a target of 14 per cent in 2026.
Mr Egan said the group had reported a strong financial and operational performance for the period, and delivered a “significant uplift” in year-on-year profitability and strong customer retention.
“We remain focused on organic growth initiatives, optimising operational efficiencies through a combination of targeted capital investment and continuous improvement of our working practices whilst also continuing to expand our geographical coverage through the successful execution of earnings-enhancing acquisitions, as demonstrated by the acquisition of Empire, announced today, which represents a further step in our strategy to expand the range and scale of services we offer,” he said.
“Whilst continuing to closely manage variable costs, our team has ensured that customer retention has remained strong. We have had some significant independent and group sales wins during the second quarter of 2024 which will positively impact the remainder of the year and into 2025.”
The company said its bank facility of £120 million had been extended to August 2027.
Mr Egan said the group was performing in line with expectations, and expected to end the year with “strong progression” towards previous levels of adjusted operating margin and adjusted operating profit for the year.
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