Johns Lyng Faces Uncertainty as CAT Revenue Falls and $1.1bn Buyout Looms
Johns Lyng Group delivered steady FY25 financial results with revenue growth and strong core operations, while securing a $1.1 billion acquisition offer from Pacific Equity Partners.
- Group revenue rose 1.8% to $1.18 billion despite fewer catastrophe events
- Core Business-as-Usual operations showed strong growth, offsetting CAT revenue decline
- New multi-year contracts and strategic acquisitions expanded national footprint
- Pacific Equity Partners proposed $4.00 per share acquisition, a 77% premium
- FY26 guidance projects revenue growth to $1.264 billion with stable EBITDA
Steady Performance in a Challenging Year
Johns Lyng Group Limited (ASX, JLG) has reported a resilient financial performance for the fiscal year ended June 30, 2025, navigating a landscape marked by fewer major weather catastrophes. The group’s total revenue climbed modestly by 1.8% to $1.18 billion, underpinned by robust Business-as-Usual (BaU) operations that compensated for a significant drop in catastrophe (CAT) revenue.
While CAT revenue fell sharply from $205.6 million in FY24 to $82 million in FY25, reflecting a quieter year for insured weather events nationally, BaU revenue surged to $1.026 billion, up from $863.9 million. This growth was driven by strong client relationships, strategic acquisitions, and a focus on innovation within the Insurance Building and Restoration Services segment.
Strategic Acquisitions and Contract Wins
Johns Lyng’s expansion strategy gained momentum with the acquisition of Queensland-based Keystone Group and the national strata platform SSKB, bolstering its presence on the east coast and in key service areas. Additionally, the group secured new multi-year contracts with major insurers including Zurich, AIG, Aidacare, and TIO, alongside contract extensions with established partners such as Suncorp and Allianz.
Commercial Building Services remained stable, contributing $65.5 million in revenue, while the Commercial Construction division entered the final phase of run-off, signaling a strategic shift away from that segment.
Capital Discipline and Cost Rationalisation
Despite external pressures, Johns Lyng maintained a strong balance sheet with net assets increasing to $504.9 million. The group implemented a global headcount reduction of approximately 120 full-time equivalents and trimmed non-essential overheads to align costs with operational realities. This disciplined approach supports the company’s capacity to reinvest in growth while preserving financial flexibility.
Acquisition Proposal by Pacific Equity Partners
Post-year-end, Johns Lyng announced a Scheme Implementation Deed with Sherwood BidCo Pty Ltd, controlled by Pacific Equity Partners (PEP), proposing a $4.00 per share cash acquisition. This offer values the company at approximately $1.1 billion equity and $1.3 billion enterprise value, representing a substantial premium of 77% over the pre-offer share price. The board has unanimously recommended the scheme, pending shareholder approval and an independent expert’s endorsement.
Outlook for FY26
Looking ahead, Johns Lyng projects FY26 sales revenue of $1.264 billion, reflecting a 12.1% increase in BaU revenue, while EBITDA is forecast to remain stable at $120.5 million. The company’s diversified business model, anchored by long-term contracts and recurring revenue streams, positions it well for continued growth despite ongoing uncertainties in catastrophe event frequency.
Bottom Line?
With a strong FY25 foundation and a transformative acquisition on the horizon, Johns Lyng Group is poised for a pivotal year ahead.
Questions in the middle?
- Will the proposed acquisition by Pacific Equity Partners receive shareholder and regulatory approval?
- How will the reduced frequency of catastrophe events impact Johns Lyng’s long-term revenue stability?
- What synergies and growth opportunities will arise from recent acquisitions like Keystone Group and SSKB?
