Johnson Service Group PLC, a UK textile services provider, presented its first-half 2026 interim results on Sept. 8, showing improved profitability even as organic revenue slipped.
Group revenue came in at £258 million, a 0.2% increase year-over-year, slightly below analyst forecasts of £262 million. Organic revenue declined 0.7%, driven by weakness in the HORECA division that was partially offset by growth in Workwear.
"Group revenue was in line with prior year. While we saw a small softening in organic revenue to a negative of 0.7%, Workwear was up 2.6% with an excellent 94% retention rate," Chief Executive Peter Egan said.
Adjusted operating profit rose 3.8% to £29.8 million, with the adjusted operating margin expanding to 11.6% from 11.1% a year earlier. Chief Financial Officer Ryan Govender noted the margin improvement of roughly 50 basis points. The full-year 2026 target is an operating margin of at least 14.0%.
The Workwear division generated £74 million in revenue, up from £72.1 million, with an adjusted operating margin of 14.9%, up from 14.4%. EBITDA margin held at 35.8%.
Revenue in the HORECA division fell to £184 million from £185.4 million, a 2.0% organic decline. However, the segment's adjusted operating margin improved by 60 basis points to 12.7%, and adjusted EBITDA margin rose to 30.4% from 29.0%. The division added new contracts representing over £5 million in annualized revenue, including a five-year contract renewal with a key customer.
Adjusted diluted earnings per share climbed 8.7% to 5.0 pence. The board declared an interim dividend of 1.8 pence per share, up 12.5%, backed by 2.5x coverage.
Capital allocation remained a focus, with £12.7 million deployed in share buybacks during the period. The weighted average share count fell to 379.9 million from 412.3 million. Since 2022, the company has returned £118.5 million through buybacks, and its current £55 million program is 51% complete.
Johnson Service Group also completed refinancing of its £175 million revolving credit facility, securing a reduced margin between 1.30% and 2.30%.
Net debt stood at £188.6 million as of June 30, representing leverage of 1.11x adjusted EBITDA, within the group's 1.0–1.5x target range. Return on capital employed came in at 16.7%, up from 12.2% in 2022 but below the 17.1% recorded in FY2025.
Energy cost efficiency continued to improve, with energy costs declining to 7.0% of revenue from 7.8% a year earlier. For FY2026, 90% of gas needs and 85% of electricity requirements are hedged, with 70% of gas and 60% of electricity locked in for FY2027. Employment costs rose modestly to 47.2% of revenue from 46.4%.
On a longer-term view, Johnson Service Group has grown revenue from £271.4 million in 2021 to £535.4 million, while expanding adjusted operating margin from 4.7% to 13.5%. The addressable market in UK and Ireland HORECA and Workwear stands at approximately £2 billion, expanding to roughly £3 billion when including healthcare and care homes.
Shares traded at $134.94 on Sept. 8, up 1.31%, though the stock remains about 22% below its 52-week high of $172.10.
