Johns Lyng ups earnings target after strong first-half

Johns Lyng Group says its insurance-focused unit is the “bedrock” of its business as the building services provider today announced first-half net profit rose 83.6% to $34.1 million from a year earlier.

Sales revenue surged 71.2% to $635.6 million, driven by the “record” volume of work its Insurance Building and Restoration Services arm has been contracted to undertake, including post-catastrophe (CAT) recovery works from the record floods last year.

Group earnings before interest, tax, depreciation and amortisation (EBITA) increased 63% to $59.4 million.

Johns Lyng says the December-half performance means the business is now on course to perform better than initially anticipated this financial year.

It has accordingly raised its 2022/23 sales revenue guidance by 11.2% to $1.146 billion and EBITDA by 5.5% to $111.1 million. The previous targets were set when Johns Lyng released its 2021/22 results in August last year.

“We are seeing a continuing and growing trend in our CAT business whereby the value and duration of these events continue to increase and have a multi-period and indeed multi-year impact on our business,” Group CEO and MD Scott Didier said.

“Although the financial contribution from CAT events is pleasing and growing, the bedrock of JLG’s earnings is our Insurance Building and Restoration Services business as usual work.

“These earnings have an annuity style profile, and we see significant further growth as we build out our footprint and leverage our service offerings, particularly in our expanding strata business.”

During the period the Insurance Building and Restoration Services division – which accounts for 88% of revenue – secured contract renewals with QBE, Allianz, Comminsure, IAG and RACQ to continue doing recovery works for their clients.

It also continues to build its footprint in the strata segment and completed two “value-adding” acquisitions, North Shore Strata Management and Adpen Strata Management. The investments further expand the number of properties under management and leverage economies of scale, Johns Lyng says.

The division booked first-half revenue of $560.9 million, almost double that of $298 million from a year earlier. Revenue from business as usual work went up 62.1% to $374.8 million and CAT revenue nearly tripled to $186.1 million.

Johns Lyng says the business is still undertaking carry-over work from the record floods in February last year in Queensland and NSW and also from the October floods in Victoria, NSW and Tasmania.

It has also been contracted by Victoria and NSW governments to provide services to flood-affected communities.

“CAT events are by their nature unpredictable, but as we expand our geographical footprint and grow our relationships with insurers and governments, we anticipate that this segment will grow substantially in the periods to come,” Johns Lyng said.

Its two other divisions, Commercial Building Services and Commercial Construction, posted revenues of $33 million and $41.6 million respectively.