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Berkshire Hathaway Specialty Insurance
Berkshire Hathaway Specialty Insurance

Insurance arm fuels Johns Lyng earnings rise

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Johns Lyng Group today reported double-digit increases in full-year earnings, underpinned by strong performances from its core insurance building and restoration services (IBRS) arm.

Sales revenue grew 14.8% to $568.4 million for the 12 months to June 30 from a year earlier, including a $358 million contribution from IBRS as measured on a business-as-usual activity basis.

The $358 million represents a 16.4% rise from the previous 2019/20 financial year.

Overall group operating earnings before interest, taxes, depreciation and amortisation (EBITDA) surged 28.3% to $52.6 million and statutory net profit after-tax improved 17.1% to $18.6 million.

The Melbourne-based building services provider says for this financial year, it is forecasting an 11.8% rise in group revenue to $635.4 million and 14.3% growth in group operating EBITDA to $60.1 million.

Johns Lyng says its earnings projections stem partly from confidence that the IBRS arm, which also includes post-catastrophe recovery works, will continue to perform strongly.

The business inked several new contract wins and renewals with major insurance clients including Chubb, RACQ and Honey Insurance, an RACQ-backed insurtech that launched in June.

There has also been limited COVID impact on the business, given insurance-related building works and post-catastrophe recovery works are deemed essential services.

“This performance is again driven primarily by our core IBRS division, the long-term cornerstone of our group, and is well supported by workflows from [catastrophe] activity,” CEO Scott Didier said.

“Our [catastrophe] response activity during the year was again a clear indication of the value of the national scale we have built, responding to disasters from southeast Queensland to coastal [WA].”

The IBRS arm is the biggest of three business divisions by revenue and operating EBITDA, accounting for 78.2% and 96.6% of the earnings metrics respectively.

It achieved a 12.1% rise in full-year revenue to $444.6 million and 24.2% increase in EBITDA to $50.8 million.

Johns Lyng’s other two divisions, Commercial Building Services and Commercial Construction, performed strongly too.

Commercial Building Services grew its EBITDA by 22% to $3.5 million and Commercial Construction by 109% to $2.1 million.

Johns Lyng says Commercial Construction undertakes projects ranging from $3-20 million in Victoria, including large-loss insurance rebuilds and cladding rectification work.

“The strongest example of our growing brand equity is our relationship with Cladding Safety Victoria, a Victorian state body responsible for the rectification of unsafe buildings,” the business said.

“We have been awarded contracts for 17 building rectification jobs over the past two years with a significant number of additional buildings scheduled for works.

“We also expect opportunities for cladding rectification work to increase in NSW during [this financial year].”