Johnson ups revenue 18% to £271m but costs bite

Shares of Runcorn-based workwear and textile firm Johnson Service Group (JSG) fell about 14% on Tuesday after it published 2021 results showing revenue up 18% to £271.4 million — but also warning that “cost pressures experienced in the final quarter are continuing.”

Profit before tax was £5.1 million compared to a loss of £32.1 million in 2020.

In its outlook, Johnson said: “We have continued to recruit new employees in the HORECA (hotel, restaurant and catering) division and have therefore carried additional cost through the winter months, which will impact margin in Q1 but will enable us to meet demand in the coming months.  

“Whilst volumes in HORECA have shown signs of recovery in recent weeks the lower than expected volumes in January and February 2022 has resulted in revenue being some £3.0 million lower.  

“In the absence of further restrictions, or any impact arising from the conflict in Ukraine, we expect volumes to continue to build during 2022 to 2019 levels.

The cost pressures we have experienced in the final quarter are continuing but we have some protection through the fixing of a proportion of our energy costs for 2022 and into 2023. 

“Further mitigating actions are ongoing. 

“We anticipate our EBITDA margin will continue to improve towards pre-COVID levels as we progress through the year.” 

Johnson Service Group CEO Peter Egan said: “These results represent a solid performance from the group against the challenging background of the COVID-19 pandemic and its impact, particularly on the hospitality sector.

“We saw a strong recovery of HORECA volumes through the second half of 2021 up until the last two weeks of December when volumes fell.

“This reduction in December continued into the start of 2022, impacting both revenue and margins in Q1, although volumes in HORECA have shown signs of recovery in recent weeks.

“Workwear volumes have remained consistent throughout 2021, recovering to pre-pandemic levels by the end of the year.

During the year we have continued to invest in our systems, sites, people and initiatives to expand our sales offering and maintain our high quality of service.

With the strength and resilience of our teams, alongside the mitigating actions we continue to take, we anticipate that HORECA volumes during 2022 will, in the absence of any further restrictions, increase towards 2019 levels.

“Cost pressures experienced in the final quarter are continuing and further mitigating actions are ongoing.

We remain very confident that the business is well positioned for growth in the medium to long term.”