Johns Lyng Group expects its core insurance building and restoration services (IB&RS) business to perform well this year after a strong first half, and has raised its earnings guidance.

The listed building services group lifted its fiscal-year group sales revenue forecast by 3.5% to $1.182 billion. This excludes its commercial construction division, which is in the latter stages of run-off.

The new guidance for earnings before interest, tax, depreciation and amortisation (EBITDA), also excluding commercial construction, is $136.4 million, up 5% on the previous forecast.

“The earnings upgrade is driven by a record volume of business-as-usual work, supported by catastrophe work,” Johns Lyng said today.

First-half group EBITDA, excluding commercial construction, increased 8.1% compared with a year earlier to $69.7 million.

IB&RS first-half revenue was $546.5 million, comprising business-as-usual revenue of $426.1 million – up 13.7% – and catastrophe revenue of $120.4 million. This operation accounts for almost 90% of group revenue.

“[Business-as-usual] activity contributed to strong first-half earnings,” Johns Lyng said.

“The depth of [our] relationships with … insurance counterparties, strengthened over the period through several contract wins and extensions, and the continued expansion of [the] strata network, forms the bedrock of the future growth prospects for the IB&RS division.

“Although inherently unpredictable, workflows stemming from [catastrophe] events continue to exhibit larger and more enduring characteristics, with work from prior events extending into FY24.”

Johns Lyng says the first half included carryover work from the flooding that hit Victoria, NSW and Tasmania in October 2022, the Murray River flood the same year, and the flood and cyclone that affected Auckland last year.

More recent catastrophe work arose from storms that hit large areas of Australia’s east coast during December and last month, and Tropical Cyclone Jasper in Queensland.

Group CEO and MD Scott Didier says the IB&RS business-as-usual work “constitutes the cornerstone” of Johns Lyng’s earnings.

“With an annuity-style profile, these earnings instil a confidence in our sustained revenue streams, and we anticipate substantial growth as we continue to enhance our market presence and capitalise on our diversified service portfolio, notably within our burgeoning strata business,” he said.

During the first half, the business secured new contracts with Tower Insurance, SafetyCulture Care and RAA, along with contract extensions from Hollard and Suncorp.

“These blue-chip counterparties are testament to [our] reputation in Australia and abroad and [Johns Lyng] is pleased to have established itself as the preferred and trusted partner to facilitate insurance building and restoration work for these esteemed clients,” the business said.

The company has also made progress expanding its international footprint, Mr Didier says, noting the agreement to provide building repair services for Tower Insurance as part of its New Zealand panel.

“[Johns Lyng group] is in a strong position to continue to deliver growth into the second half of FY24. We are excited by the opportunities ahead of us … our deep partnerships, strong culture and focus on exploring value have created defensive growth opportunities and we look forward to continuing to deliver on those in the future,” he said.