Empresaria Group plc (AIM: EMR), the international specialist staffing group, provided a trading update where it warned of the ongoing impact of Brexit uncertainty on its engineering sector and a slowdown in its German automotive sector.

The group's full-year adjusted profit before tax is now expected to be at least £9 million. This is compared to  the previous year’s profit before tax, which was £9.4 million.

In August, the group published its unaudited interim results for the six-month period ended 30 June 2019 with revenue 2% lower in constant currency and operating profit sliding by almost one-third.

“At the time of our interim results we expected to meet market forecasts,” the group stated. “We identified that our Engineering sector was experiencing an adverse impact from Brexit and challenging market conditions and we expected the second half to remain difficult. Despite actions taken to turn the business around, the UK Engineering business has experienced further material declines in revenue with the ongoing impact of Brexit, the insolvency of certain key clients and the early closure of major projects.”

“We now expect the engineering sector to deliver a full year adjusted operating loss of approximately £1.5 million, Empresaria stated. “Due to this further deterioration in trading, a material restructuring of the UK Engineering business is underway and we expect this to be completed before our next scheduled trading update in January.”

With the decision to delay Brexit again, Empresaria anticipates further months of related uncertainty in the UK.

In addition, the group said its German automotive sector slowdown has continued to impact its European operations. The impact of these challenges has largely been offset by the positive growth seen in many other businesses in the group, but the net impact at the full year is now expected to be negative.

“We anticipate that the group's full year adjusted profit before tax is now expected to be at least £9 million,” Empresaria stated. “Significant actions have been taken in the impacted businesses in the UK and Germany to right size their cost base with the full benefit of this expected to come through in 2020.”

“While we are disappointed by the performance of our engineering sector and the challenging economic environment, we believe we are taking the right actions for the long-term benefit of the group,” CEO Rhona Driggs, commented. “We have a strong, profitable and cash generative business that is being positioned for further growth in net fee income and profitability.”

The group emphasized that ‘significant change is underway’, including aligning the group into core sectors, identifying synergies with brands and markets, implementing cross-selling initiatives and identifying cost synergies such as rationalizing back office support. It added that it is seeing early positive signs from these initiatives.