Johnson Service Group plc (LON:JSG) has seen a total collapse in demand from the hospitality market because of the coronavirus lockdown but its industrial workwear division has remained much more resilient.
Revenue in April fell 97% in the hotel, restaurant and catering division, after demand for table linen dried up, with most of the division’s workers since put on furlough under the government scheme.
In March, sales were down 27%, following 9% growth in the first two months of the year.
Workwear rental, which includes protective wear and laundry services, saw a reduction in demand from ‘blue collar’ industries but this has been partly offset by increased demand from food producers.
Growth in this business was slightly negative for the first quarter and down 12% in April.
Management, who have taken 20% pay cuts, said the group’s banks have shown their support and £40mln may be drawn from an existing facility, with talks ongoing about resetting debt covenants for 2021.
No dividend will be paid this year, with the saying it “remains confident in the prospects and viability of the group and is focussed on taking action to maintain its strong cash and liquidity position and ensuring the business is ready to return to more normal levels of operation”.
Shares in JSG were down 1.5% to 117p on Tuesday morning.