Demand for rented overalls and linen helps textile services group Johnson Service (JSG) to deliver solid half-year results, and the company remains on the lookout for new acquisition opportunities.
This was confirmed by chief executive officer (CEO) Yvonne Monaghan to Shares, with an abundance of possibilities in a fragmented £500 million leisure and hospitality textile rental sector.
'There is nothing imminent but we are always talking to people so it is case of 'watch this space' at the moment', the CEO tells Shares. Monaghan's gaze is most likely to fall on sub-scale family-run operators.
Shareholders will no doubt be willing to back the boss if trading results remain as robust as today's interims, which saw the stock rise 3.7% to 62.5p. The figures show earnings per share (EPS) up 31% at 1.7p for the six months to end-June and hiked its dividend 25%. Management's preferred measure of profitability, adjusted EPS, which excludes unusual items, comes in at 2.3p.
Sanlam Securities analyst Adrian Kearsey says the results are 'upbeat' and 'slightly ahead of revised forecasts'.
Revenue in Johnson's textile rental business, which rents and cleans work uniforms and linen for the leisure, catering and hospitality industries, was up 10.1% at £74.4 million. Operational gearing, when revenue increases on top of a relatively fixed cost base, powered operating profit at the rental unit 25.6% higher to £10.8 million.
Johnson's dry cleaning business struggled by comparison. Revenue fell slightly to £27.2 million and operating profit declined from £0.7 million to £0.4 million. Measures to improve performance include the introduction of a new cleaning technique, GreenEarth, which the company claims is more environmentally friendly and reduces colour fading. Johnson has also gone into partnership with supermarket Waitrose, offering dry cleaning through their customer service desk.
Second half results will benefit from a full six month contribution from Bourne Textile Services, a company acquired by Johnson in March this year.
