Johnson Service Group plc (LON:JSG) said it entered a consultation with employees at some of its HORECA (Hotels, Restaurants and Catering) sites to change working practices to minimise potential job cuts.
The textile rental and workwear group said revenue in the division servicing the hospitality industry benefitted from summer staycations, slightly ahead of initial expectations, but it is too early to forecast the anticipated volumes for the remainder of this year.
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Volumes in the division rose to 25% of typical levels in July and to 45% in August after a phased reopening.
The workwear segment saw a further gradual reopening of some customers which is expected to continue, though the company remains “vigilant as to the potential impact of ongoing employment levels of workwear customers”.
Workwear continued to operate throughout lockdown with 12% reduction in volume in April, improving to 6% in August. Customer retention levels were 93.8% at the end of July.
Adjusted underlying earnings (EBITDA) margin for the year to December is expected to be similar to the 21.7% recorded in the first half.
In the six months to June 30, revenue slid 31% to £144mln but last year’s £15mln profit before tax slumped to an £18mln loss due to the pandemic. Net debt at period-end was £39mln.
“Given the pre-existing competitive advantages from the benefits of scale, the severity of the downturn and its balance sheet strength, Johnson should emerge from Covid-19 in an even stronger competitive position,” analysts at Peel Hunt noted.
Shares advanced 4% to 108.28p on Wednesday at the opening bell.