'Highest period of demand': Johns Lyng ups earnings outlook

Building services provider Johns Lyng Group has raised its key earnings targets for this financial year to June 30, as the NSW/Queensland floods and other catastrophes in the last 12 months contributed to unprecedented demand for its services.

The business says in an investor update today revenue will increase 52.5% to $867 million from a year earlier and earnings before interest, tax, depreciation and amortisation (EBITDA) 57.8% to $83 million.

In the previous 2020/21 financial year, revenue grew 14.8% to $568.4 million and EBITDA surged 28.3% to $52.6 million.

The revised guidance represents an 8% rise from its previous revenue forecast made in February, and 5.4% increase on the EBITDA estimate.

Johns Lyng says the business experienced “the highest period of demand in its history”, prompting the earnings revision.

“The upgrade is driven by ongoing strong demand for the Group’s core Business as Usual services, and an increase in catastrophe activity… primarily in northern NSW and south-east Queensland as a result of the devastating floods that impacted those regions,” Johns Lyng says.

The Melbourne-based publicly listed business has a core insurance building and restoration services arm that undertakes post-recovery works for insurers. It has contracts with a number of insurers such as Chubb and last December it extended a contract with Suncorp to provide domestic building insurance repairs across NSW, Victoria, Queensland, SA, the ACT and the NT.

In April the business was contracted by the NSW Government to lead its recovery response to the February/March flood catastrophe.

“[Catastrophe] related activity continues to boost our returns to shareholders, with an increasing frequency of major weather events,” Group CEO Scott Didier said.

“We are very busy assessing the impact of the recent extreme weather events on our business which is expected to be materially positive and multi-year in nature.

“Johns Lyng is in the fortunate position to have not been materially impacted by inflationary or supply chain issues.”