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Johns Lyng lifts earnings forecast as key insurance arm performs 'impressively'

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Johns Lyng  Group  has  again bumped up its earnings outlook for this financial year, citing the strong performance of its key Insurance Building & Restoration Services  division  and increased  post-catastrophe recovery works.

The revised guidance forecasts earnings before interest, tax, depreciation and  amortisation  (EBITDA)  of $52.1 million, representing a 10% rise from the last projection made in February when its first-half results for the six months to December 31 were released.

The forecast for group revenue has also been raised, by  6.5% to $558.2 million from the  previous guidance,  the  listed building services provider  says  in  an  investor update to the  Australian Securities Exchange.

Johns Lyng Group says the new financial projections  are driven by ongoing strong demand for its core “business as usual” services  and a significant increase in  catastrophe  recovery  activity during this financial year, primarily in northern NSW and south-east Queensland.

“This upgrade clearly articulates the value proposition of the business we have worked hard to build in that it is driven by ongoing strong core business activity, as well as significant workflows from  [catastrophe]  events,” CEO Scott Didier said.

“Our Insurance Building and Restoration Services businesses continue to grow and continue to deliver.

“They have been the backbone of our business for nearly two decades and they have yet again performed very impressively in FY21.”

The Insurance Building and Restoration Services unit made up 95.9% of overall EBITDA in the December half and 78% of group revenue. The division  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.

Mr  Didier says catastrophe-related activity is  “an additional bonus to our performance and we’ve been kept very busy in that respect during FY21, helping clients and communities respond to some of the disasters that have hit, mainly in NSW and Queensland earlier in 2021.”

He says catastrophe workflows have been very strong with the business  still working through  a significant pipeline of jobs.

“This  [catastrophe]  activity is a significant driver of this upgrade and our strong performance for FY21 more broadly,” Mr  Didier said.

Mr  Didier says that while catastrophe-related  related activity was a major contributor in FY21, he expected the bulk of  revenue from more recent events to be  realised  in  the next financial year.