Johnson Service Group (JSG) H2 2024 earnings summary

Executive summary

• Organic revenue in HoReCa rose 5.6%, with total revenue up 10.3% to £513.4m and improved customer retention at 93%.

• Integration of Empire and Regency acquisitions enhanced luxury hotel service offerings and were immediately earnings enhancing.

• Sustainability initiatives advanced, with new carbon, water, and plastic reduction targets set for 2025 and the third Sustainability Report published.

• Well positioned for continued progress, focusing on operational excellence, sustainability, and disciplined investment.

• On track to achieve at least 14% adjusted operating profit margin by 2026.

Financial highlights

• Group organic growth was 3.8%; adjusted EBITDA rose 16% to £152.6m, margin improved to 29.7% from 28.3%.

• Adjusted operating profit up 23% to £62.3m; adjusted EPS increased to 10.1p.

• Final dividend declared at 2.7p, full year 4p per share, with dividend cover at 2.5x.

• Net debt at £115.6m (2023: £104.9m), leverage reduced to 0.74x.

• Return on capital increased to 15.5% from 13.9% last year.

Outlook and guidance

• Board confident in delivering further margin improvement in 2025 and maintaining a strong balance sheet.

• Adjusted operating margin expected to continue improving, targeting at least 14% in 2026.

• Intention to return up to £30m to shareholders via share buybacks.

• Energy costs expected to reduce to around 8% of revenue in 2025.

• Labour cost improvements challenged by minimum wage and National Insurance increases; £6m annual NI impact expected.