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Insurance arm powers Johns Lyng’s first-half earnings

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Building services group Johns Lyng has raised its outlook for this financial year after a strong first-half performance, powered by its insurance-focused division.

The new forecast projects group operating earnings before interest, tax, depreciation and amortisation (EBITDA) of $47.4 million, a 15% increase from the previous estimate provided last August while the guidance for sales revenue has been revised to $524.1 million, up 8% from the original target.

Johns Lyng says a strong pipeline of work-in-hand in the group’s core business, Insurance Building & Restoration Services (IB&RS), will carry through the second half, while recent contract wins during the first half are expected to begin to contribute.

The IB&RS division, which accounts for 95.9% of EBITDA, provides building fabric repair and contents restoration services after damage from insured events such as natural disasters. It also offers strata management and property/facilities management services.

In the first-half period to December 31, the division achieved a 41.4% rise in EBITDA to $26.6 million from a year earlier. Coronavirus restrictions have had a “limited” impact so far as the IB&RS unit is involved in “essential services” works, Johns Lyng says.

Group EBITDA improved 38.8% to $27.7 million while sales revenue climbed 18.9% higher to $277.8 million.

“It’s pleasing to report another period of very strong earnings growth, which continues our consistent upward trajectory since we listed in 2017,” CEO Scott Didier said.

“These results are a fantastic achievement in the context of the COVID-19 pandemic, and again highlight that our business is generally insulated from broader economic and other external conditions.

“Organic growth was also very pleasing during the period, as we announced six new contract wins with major insurers in another great representation of our standing in the market.”

He says the recent contracts with RACQ, Chubb and other key insurance providers “are very important partnerships that bode well for further growth”.

The group’s Commercial Construction division is expected to perform well too, having won 17 large scale contracts to carry out rectification works in high-rise buildings in Victoria as part of the state’s $600 million cladding repair scheme.

Going forward Johns Lyng is looking to scale up its presence in the strata management sphere, building on recent moves to expand this side of the business.