DISRUPTION caused by severe weather conditions will impact profits at the drycleaning operation of Runcorn-based Johnson Service Group.
But in a full year trading update today the firm said the division, which operates out of Prescot, is encouraged by the underlying performance of the business in the second half of its financial year.
During the year drycleaning achieved a 1% improvement in like-for-like growth due to newly introduced services and a focus on its better performing sites.
However, severe wintry conditions in the first six weeks of 2010 reduced first half profits for drycleaning by £600,000 and the latest bad weather in November and December is expected to reduce divisional profits by more than £1m.
Today’s update said: “It is very unusual to have suffered such extreme weather conditions at both the start and end of the year, which will reduce the profitability of the drycleaning division for the year as a whole to below the board’s expectations.
“However, we remain encouraged by the underlying performance of the business in the second half.
“In addition, the full impact of the benefits arising from the closure of loss-making stores and the reduced central overheads should be seen in 2011.”
The SGP facilities management arm performed in line with expectations during the second half of the year and has now completed the acquisition of seven PFI contracts from the administrators of Jarvis.
Johnson said the seven contracts have performed in line with management expectations, however, an eighth acquisition, with annual revenues of about £600,000, is now unlikely to go ahead.
Meanwhile, both textile rental arms – Johnsons Apparelmaster and Stalbridge – have exceeded management expectations for the year and will generate an extra £700,000 of operating profit due to the 2010 financial year being a 53 week trading period.
Net debt, by the end of December, is expected to have fallen from £64.6m in June to £60m and further reductions are anticipated during 2011.
And the group is also expecting a tax windfall of £7m in the first quarter of 2011 linked to the disposal of its corporatewear division in 2008, together with other adjustments in previous year. However, it stresses that the outcome remains subject to final agreement from the Inland Revenue.
