Johnson Service Group Reports Strong 2024 Results with 23.4% Profit Growth
Why we think this is good
The company has demonstrated robust financial performance in 2024, with significant improvements across key metrics. Adjusted operating profit increased by 23.4% to £62.3 million, while revenue grew by 10.3% to £513.4 million. Notably, the adjusted operating profit margin improved by 120 basis points to 12.1%, and adjusted diluted earnings per share rose by 29.5% to 10.1 pence. The HORECA division showed organic revenue growth of 5.6%, and Workwear maintained stable revenue with improved customer retention. While net debt increased slightly, the company maintains strong liquidity with access to a £120 million revolving credit facility. The Board's confidence in future performance is evident in their plan for a further share buyback programme and a target of at least 14% adjusted operating margin by 2026. However, challenges such as increasing labor costs and elevated energy prices persist, tempering the overall positive outlook.
Key Points
- Revenue increased by 10.3% to £513.4 million
- Adjusted operating profit rose by 23.4% to £62.3 million
- Adjusted diluted earnings per share up 29.5% to 10.1 pence
- Adjusted operating profit margin improved by 120 basis points to 12.1%
- Organic revenue growth of 5.6% in HORECA division
- Workwear customer retention improved to 93% (2023: 91%)
- Free cash flow increased to £74.6 million from £55.2 million in 2023
- Net debt at £115.6 million, with access to £120 million revolving credit facility
- Acquisition of Empire Linen Services Limited for £20.6 million
- Board targeting adjusted operating margin of at least 14% by 2026
- Plans announced for further share buyback programme of up to £30 million
- Final dividend of 2.7 pence per share proposed, bringing total dividend to 4.0 pence (2023: 2.8 pence)
Summary
Johnson Service Group PLC has reported strong financial results for the year ended 31 December 2024. Revenue increased by 10.3% to £513.4 million, with organic growth of 5.6% in the HORECA division. Adjusted operating profit rose by 23.4% to £62.3 million, and the adjusted operating profit margin improved by 120 basis points to 12.1%. Adjusted diluted earnings per share increased by 29.5% to 10.1 pence. The company maintained strong liquidity with access to a £120 million revolving credit facility, despite a slight increase in net debt. Customer retention rates improved, particularly in the Workwear division. The Board remains confident about future performance, targeting an adjusted operating margin of at least 14% by 2026 and announcing plans for a further share buyback programme. However, challenges such as increasing labor costs and elevated energy prices were noted. Broker targets suggest a positive outlook, with Deutsche and Berenberg Bank maintaining 'Buy' recommendations and increased price targets.