Johnson Service Group PLC reported first-half revenue of £258.0 million on Wednesday, flat year on year and marginally below the £262 million analysts had forecast, as the workwear and hospitality clothing provider continued to navigate soft organic demand across its groups.
Group-wide organic revenue softened slightly to negative 0.7%, with the HORECA division contracting 2.0% to £184.0 million in revenue while the Workwear segment grew 2.6% to £74.0 million. Despite the revenue stagnation, profitability metrics improved. Adjusted operating margin rose 50 basis points to 11.6%, lifting adjusted operating profit 3.8% to £29.8 million. Adjusted EPS climbed 8.7% to 5.0 pence.
The improvements came even as employment costs rose to 47.2% of revenue from 46.4% in H1 2025, driven by wage inflation in the UK and Republic of Ireland. However, energy costs retreated to 7.0% of revenue from 7.8%, cushioning the margin impact. The company secured hedging for approximately 90% of full-year 2026 gas requirements, 85% of electricity and 70% of diesel. Positioning for 2027 is underway at 70% for gas, 60% for electricity and 20% for diesel.
Adjusted EBITDA increased 3.3% to £77.9 million, with EBITDA margin expanding 90 basis points to 30.2%. Return on capital employed stood at 16.7%, compared with 15.8% in H1 2025 and 17.1% for full-year 2025. Leverage remained firmly controlled at 1.11 times adjusted EBITDA, within the company’s 1.0x to 1.5x target range.
Net debt rose to £188.6 million from £159.2 million at year-end 2025, or £135.9 million excluding IFRS 16 lease liabilities. Capital expenditure totalled £49.1 million, split between £17.4 million for fixed assets and software and £31.5 million for rental stock.
On the customer front, the HORECA division secured a five-year contract renewal with a key client and added new contracts carrying annualized revenue exceeding £5.0 million. The Workwear division maintained a 94% customer retention rate, and its adjusted operating margin expanded 50 basis points to 14.9%.
Management reaffirmed its full-year 2026 target of an adjusted operating margin of at least 14.0%. On a historical basis, Johnson Service Group’s revenue has grown from £271.4 million in 2021 to £535.4 million in 2025, while adjusted operating margin has expanded from 4.7% to 13.5% over the same period.
The company returned £118.5 million to shareholders via buybacks since 2022, with its current £55 million repurchase program 51% complete. Sustainability progress was also noted, with Scope 1 and 2 carbon emissions intensity down 14% versus a 2022 baseline on the way to a 40% reduction target by 2030. Water intensity fell 20% against the same baseline, and 94% of waste was diverted from landfill, ahead of the company’s 75% goal. The firm retained its EcoVadis Silver Rating, placing it in the top 6% of its industry category.
Shares closed at 133.00 GBP, roughly 22% below their 52-week high of $172.10.
