Johnson Service Group’s FY25: profits up, margins up, dividends up
Johnson Service Group (JSG) has delivered a tidy set of preliminary results for the year to 31 December 2025. Revenue edged up, but profits and margins did the heavy lifting. The Board is guiding to further progress in 2026 and says it remains on track to hit an adjusted operating margin of at least 14.0% this year.
Here’s what stood out, why it matters, and what I’m watching next.
Key numbers investors need to know
| Metric | FY25 | FY24 | Change |
|---|---|---|---|
| Revenue | £535.4m | £513.4m | +4.3% |
| Adjusted operating profit | £72.5m | £62.3m | +16.4% |
| Adjusted operating margin | 13.5% | 12.1% | +140bp |
| Adjusted EBITDA | £166.8m | £152.6m | +9.3% |
| Adjusted profit before tax | £64.5m | £54.8m | +17.7% |
| Adjusted diluted EPS | 12.1p | 10.1p | +19.8% |
| Dividend | 4.8p | 4.0p | +20.0% |
| Net debt (incl. leases) | £159.2m | £115.6m | +£43.6m |
| Leverage (Net debt / Adjusted EBITDA) | 0.95x | – | – |
| ROCE | 17.1% | 15.5% | +160bp |
Note on jargon: “Adjusted” excludes amortisation of acquired intangibles and exceptional items; EBITDA is earnings before interest, tax, depreciation and amortisation. These measures help show underlying trading, but they aren’t statutory figures.
Divisional performance: HORECA drives the step-up
HORECA growth with a margin kick
The Hotel, Restaurant and Catering division delivered revenue of £389.8 million (2024: £371.2 million) and lifted adjusted operating profit to £59.8 million (2024: £49.4 million). That’s a margin of 15.3%, up 200bp year on year. Management credits predictable volumes, operational efficiencies from targeted capex, and lower energy as a share of sales.
Operationally, the new Crawley site – designed to use less energy and more water recycling, with HVO-powered deliveries – reached about 50% of capacity by year end, and London/Southeast customer transfers went to plan. JSG also picked up customer contracts worth about £4.9 million of annualised revenue as smaller rivals reassessed their strategy in a costlier operating environment.
Luxury Linen and Ireland continue to invest
Johnsons Luxury Linen benefited from high retention and new five-star wins. The Tottenham site acquired in 2024 has been integrated, and the £1.3 million capacity boost at Corsham is now being used, with record volumes and efficiencies in 2025.
In Ireland, the rebrand to Johnsons Ireland is complete. Healthcare volumes rose, hospitality was mixed regionally, and major site upgrades in Wexford and Naas have increased capacity by roughly 20% and 40% respectively.
Workwear: steady volumes, solid cash generator
Workwear revenue rose to £145.6 million (2024: £142.2 million). Adjusted operating profit edged up to £21.0 million (2024: £20.3 million), with margin at 14.4% (2024: 14.3%). Retention improved to 94% (2024: 93%) and customer satisfaction remained robust. There were two notable one-offs: a successful relocation from Lancaster to Manchester (£1.4 million exceptional cost) and a Bristol unit fire (£0.4 million exceptional cost, with business interruption insurance in place).
Costs, hedging and why the margin story looks sticky
Energy costs fell to 7.4% of revenue (2024: 8.8%) but remain above 2019 levels (6.2%). Sensibly, JSG has locked in a big chunk of 2026 usage – about 90% of electricity and 95% of gas for H1, and 75% and 85% respectively for H2 – plus roughly 70% of diesel for the year. There is already visibility into 2027 too (around 55% electricity and 70% gas fixed).
Labour is still the largest cost and climbed to 46.0% of revenue (2024: 44.6%), reflecting wage and NI increases in the UK and minimum wage changes in the Republic of Ireland. Management expects labour as a percentage of revenue to remain relatively stable into 2026, helped by pricing and productivity improvements.
Cash, capex and shareholder returns
Free cash flow was £69.1 million (2024: £74.6 million). Investment stayed high: £65.8 million on textile rental items and £35.8 million on property, plant and equipment. Net debt rose to £159.2 million, reflecting £54.7 million of buybacks during the year, £17.4 million of dividends and that capex programme, partly offset by stronger trading.
Leverage stands at a conservative 0.95x. There’s a £135.0 million revolving credit facility to August 2027, and discussions to refinance and extend are underway. The progressive dividend continues – up 20.0% to 4.8p, with 2.5x cover. A final dividend of 3.2p is proposed, payable on 15 May 2026 to holders on 17 April 2026 (ex-dividend 16 April 2026). Since 2022, JSG has returned £90.3 million via buybacks, with the Board actively reviewing further buybacks through 2026.
Main Market move: signalling scale and ambition
Admission to the Main Market on 1 August 2025 is a notable step. It broadens the investor base, typically improves liquidity and puts JSG on a bigger stage. Pair that with a disciplined capital allocation framework – organic investment, accretive acquisitions, progressive dividend, and surplus cash to shareholders – and the strategy reads well.
The good, the bad, and the watchlist
What I like
- Profit quality: Adjusted operating profit up 16.4% on just 4.3% revenue growth shows real operational progress.
- Margin momentum: Group adjusted operating margin rose 140bp to 13.5%; HORECA margin jumped to 15.3%.
- Energy tailwind managed: Energy down as a share of sales, with substantial hedging locked for 2026.
- Cash returns and discipline: Dividend up 20.0%, buybacks ongoing, and leverage at 0.95x.
- ROCE up to 17.1%: evidence that capex is earning its keep.
What tempers the enthusiasm
- Organic growth was modest at 1.4% (HORECA +1.0%; Workwear +2.4%), reflecting a tougher backdrop.
- Labour intensity: Labour rose to 46.0% of revenue and remains a structural pressure point.
- Net debt increased to £159.2 million, driven by investment and returns – sensible, but it narrows headroom if conditions worsen.
- Hospitality exposure: Independent hotel/restaurant churn picked up in some regions; pricing and renewals are tougher for certain end-customers.
- Refinancing to address before August 2027: not urgent, but it’s on the to-do list in a still-uncertain rate environment.
Outlook: guidance and what to watch in FY26
The Board expects another year of growth and remains on track for an adjusted operating margin of at least 14.0% in 2026. The focus areas are clear: targeted site investment, operational efficiencies, disciplined pricing, selective M&A, and the ongoing review of buybacks.
My watchlist
- Margin trajectory: Does the Group cross the 14.0% adjusted operating margin target and hold it?
- Volume trends in HORECA: Any easing in regional/sector volatility as summer seasonality kicks in.
- Labour cost containment: Evidence that labour stays broadly stable as a share of revenue.
- Cash conversion: Free cash flow after a heavy investment phase and its split between capex, M&A, and buybacks.
- Refinancing progress: Terms and tenor for the next facility iteration.
Bottom line: a resilient model earning its margins
JSG’s FY25 reads like a classic operationally led upgrade: small top-line growth, strong profit expansion, and rising returns. Energy management, capacity investments like Crawley, and solid customer metrics in Workwear all support the case for sustainable margins. Set against that, labour remains a structural headwind and the hospitality market is not without churn.
Overall, this is a confident print with sensible guidance. If management executes on volume and efficiency while keeping the capital allocation tight, FY26 should bring another notch of profitable growth – and potentially more cash back to shareholders.
