Johnson Service Group

Johnson Service Group is set to show some encouraging profits for 2009, after a first-half turnaround.

Analysts argue the London-based company, whose Johnson Drycleaning arm owns Sketchley and Jeeves of Belgravia, is likely to report pre-tax profits nearly doubled to £12m despite a 12 per cent fall in turnover to £228.5m. Since executive chairman John Talbot took the helm in late 2007, he has been steering AIM-quoted Johnson away from the abyss into which disastrous previous expansion policies had nearly plunged it.

Key to the company’s recovery has been turning round its Stalbridge tableware and linen division, whose earlier rapid expansion into downmarket, low-margin business cost the company some £75m and saw it lose £47.4m in 2007. Stalbridge is now profitable, in higher-margin lower-volume fields and Johnson turned a £7.5m loss into £5.4m interim pre-tax profits in the first half of last year and reinstated the dividend.

Johnson’s Apparelmaster division, supplying and laundering working clothes to companies, has been winning new business. The company’s incongruous but healthy facilities management arm has lined up new blue-chip clients and Johnson Drycleaning’s ‘Green Earth’ eco-friendly operation has been well received.

Talbot has negotiated new banking facilities of £77.5m for the company, though he says he wants to reduce borrowings from their present £68m. In today’s tough climate, house broker Investec sees turnover of £230m this year with pre-tax profits of £11.8m, rising to £12.9m in 2011.

The shares, which collapsed from nearly £5 five years ago to 5.25p last year, have now bounced to 21p. If Talbot’s medicine continues to work, they could rally further.