Shares in Johnson Service Group (LON: JSG) have fallen more than 7% on Tuesday after the linen rental and workwear group’s interim results revealed persistent softness in its hospitality-facing HORECA division, overshadowing headline profit growth.
For the six months to 30 June 2026, the group reported revenue broadly flat at £258.0m, up just 0.2% year-on-year, as organic revenue slipped 0.7%. Adjusted operating profit rose 3.8% to £29.8m, lifting margins by 50 basis points to 11.6%, while adjusted diluted earnings per share climbed 8.7% to 5.0p. The interim dividend was raised 12.5% to 1.8p.
However, investors focused on weakness in HORECA, which serves hotels, restaurants and caterers. Revenue there fell 2.0% organically, with management admitting the seasonal summer uplift was “more modest than originally anticipated” and warning that softer trading is expected to persist for the rest of the year amid difficult contract renewals and market churn. Workwear fared better, with revenue up 2.6% and margins improving to 14.9%.
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Adding to concerns, net debt rose to £188.6m from £159.2m at December 2025, pushing leverage up to 1.11x from 0.95x, partly reflecting the ongoing £55m share buyback, of which £28.2m has been completed.
Despite the share price reaction, chief executive Peter Egan reiterated guidance for a full-year adjusted operating margin of at least 14%, insisting the group remains on track for “another year of progress” despite challenging market conditions.
