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Sweden – Stable revenue as Proffice announces revised strategy and new financial targets

06 May 2015

Swedish staffing firm Proffice (PROEB: SS) reported revenue for the first quarter ending 31 March 2015 of SEK 1 billion (€108.1 million), an increase of 1% compared with SEK 996 million (€106.7 million) in Q1 2015. 

  Q1 2015 Q1 2014 Change
Revenue SEK 1,009 million SEK 996.0 million +1.0%
€108.1 million €106.7 million
Operating Income SEK 1 million SEK 0 -
€0.1 million -
EBITA SEK 22 million SEK 20 million +10.0%
€2.4 million €2.1 million

Henrik Höjsgaard, CEO of Proffice, commented: “Proffice continued to perform well overall in Q1. All of the Group’s operating areas – Staffing, Recruitment, and Outplacement – grew and the consolidated underlying operating profit and operating margin improved. Cash flow remained strong during the quarter, which led to a further strengthening of financial position.”

“It is gratifying to note that the Swedish operations continue to perform well in terms of profitability. We are now intensifying our efforts to increase profitability in the rest of the Nordic region, that is, Norway, Finland, and Denmark. Among other things, a new head of the Norwegian operations was appointed in Q1.”

“In conjunction with the Group's strategic review and new circumstances in the current market situation, SEK 36 million (€3.9 million) in goodwill attributable to Finland was written down. In addition, the restructuring in Norway encumbered operating profit by SEK 2 million (€0.2 million). Consolidated operating profit excluding these non-recurring items was SEK 24 million (€2.6 million), an increase of 20% year-on-year,” Mr Höjsgaard concluded.

Proffice’s Board has also set out new long-term financial targets, including achieving consolidated EBITA as a percentage of revenue of 5%. Proffice’s EBITA margin for Q1 2015 was 2.2%, up from 2% in Q1 2014.

In order to achieve its new financial targets, Proffice has revised its strategy to focus on the provision of workers with specialist or niche skills. The company will also focus on clear prioritisation of profitable business segments and offerings, and evaluate services and partnership/alliances that could strengthen Proffice’s market share.

Proffice operates three primary business segments, with Q1 revenue broken down as follows:

  Q1 2015 Q1 2014 Change
Staffing SEK 947 million SEK 938 million +1.0%
€101.4 million €100.5 million
Recruitment SEK 46 million SEK 43 million +7.0%
€4.9 million €4.6 million
Outplacement SEK 16 million SEK 15 million +7.0%
€1.7 million €1.6 million

The company has operations in four markets; Sweden, Norway, Finland, and Denmark, but breaks down its revenue between Sweden and Other Nordics:

  Q1 2015 Q1 2014 Change
Sweden SEK 744 million SEK 749 million -1.0%
€79.7 million €80.2 million
Other Nordics SEK 265 million SEK 247 million +7.0%
€28.4 million €26.5 million

In April 2015, Proffice announced that it was selling its aviation business. The loss of a contract to supply cabin crew to airliner Norwegian Air prompted Proffice to sell its aviation business to rival firm OSM Aviation, which had been awarded the contract to supply staff to Norwegian Air.

For Proffice Group, the Aviation business represented an annual turnover of around SEK 300 million (€32.1 million. The sale is expected to have a total negative impact of approx. SEK 15 million (€1.6 million) on the group's full-year results for 2015. The purchase price amounted to SEK 50 million (€5.4 million), including a preliminary capital gain of SEK 10 million (€1.1 million).

In trading today, the company’s share price increased by 3.5% to SEK 20.80 (€2.23), a decrease of 6.3% compared with a year ago. Based on its current share price, the company has a market value of SEK 1.4 billion (€152.2 million)