Johnson Service Group hikes outlook as labour costs expected to fall
Johnson Service Group has said the proportion of revenue used to pay its workers has fallen and will continue to drop in the second half of the year.
The business said that its labour costs had been 47.5 per cent of revenue in the six months to the end of June last year but that fell to 45.1 per cent a year later. The figure is still higher than before the pandemic.
“We are, however, encouraged by the improving efficiency as volumes continue to return and, accordingly, expect labour, as a percentage of revenue, to reduce even further by the end of the year,” the business said on Tuesday.
Johnson Service Group reported that its financial results for the full year will be better than previously thought.
The company said in July that it expected profit to be “slightly ahead” of what analysts were forecasting. On Tuesday, bosses revealed that they expect to do slightly better than even that.
“Recognising the volumes processed over the busy summer months, improving efficiencies and a somewhat more predictable outlook on the cost base, together with our assumption that the trading environment remains unchanged, we expect the full year outturn to be slightly ahead of the guidance provided in our July trading update,” they said.
The business reported a 22 per cent rise in revenue to £215 million in the six months to the end of June while pre-tax profit more than doubled from £5.1 million to £13.5 million. The company was still feeling the impact of Covid-19 in the previous year.
Chief executive Peter Egan said: “The group’s strong performance during the first six months of the year, with a significant improvement in revenues, profits and margins, reflects the return to more normal and predictable trading patterns alongside proactive management of our cost base and improving production efficiencies.”
The company said that the costs for gas, electricity and diesel had grown to 10.3 per cent of its revenue in the six months to the end of June, one percentage point higher than the same period a year earlier, and much higher than the 6.5 per cent seen in the first half of 2019.
August Graham – Press Association