Empresaria (EMR:LSE) today reported net fee income was down 11% on a constant currency basis to £57.5 million. On a reported basis, net fee income fell by 12%.

The UK-based international specialist staffing group today published a trading update for the financial year ended 31 December 2023 ahead of announcing its full year results on 26 March 2024.

The macroeconomic backdrop remained challenging throughout 2023 and this had an impact across the group.

All of the group’s regions saw year-on-year reductions in net fee income except for Offshore Services which has delivered year-on-year growth despite the adverse market conditions. 

Permanent placement activity was the most significantly impacted with net fee income down 25% year-on-year.  Temporary and contract net fee income was down 10%, primarily driven by its exposure to the global IT sector and the US Healthcare sector, both of which had significant reductions in demand in 2023.

Net fee income by region for the year ended 31 December was as follows:

Rhona Driggs, CEO of Empresaria, said, "Challenging market conditions persisted throughout 2023 across our markets and sectors.  We took significant action to adjust our cost base and continued to manage this closely as the year progressed.  I am proud of the resilience of our team in navigating these difficult times.”

During 2023 Empresaria took strong action on costs, including reducing its headcount (excluding Offshore Services) by 17%. The group said this delivered a significant benefit in the second half of the year and will continue to do so in 2024. 

Empresaria added that it has also been further streamlining its operations, bringing businesses in key markets under a single leader and common operating structure. 

“In countries where we operate in more than one of our core sectors this will enable us to provide our full range of services and increase penetration of key clients as well as helping us to operate more efficiently and effectively,” the group stated. “By consolidating our leadership structure we have also been able to reduce the size of our senior management team, without adversely impacting our group-wide initiatives.”

Empresaria is focussing on its core sectors of Professional, IT and Healthcare and on the markets where it sees the greatest opportunity for growth. As part of this, the group continues to review the sub-sectors and markets in which its operates. As a result, in 2023 Empresaria closed its Vietnam operation. It also merged its UK marketing brand into its lead Professional brand with the aim of enabling it to offer marketing recruitment services seamlessly to a wider client base. The group expects a small number of further actions in the short term.

The company’s Offshore Services operation continues to perform strongly and delivered year-on-year growth in net fee income despite the challenging market conditions and has grown at a compound annual rate of 32% since 2017. The board believes that its share price does not reflect the value and potential of this business. Given M&A activity that has occurred in the sector in recent years, such as the acquisition of PSG Global by Teleperformance in late 2022, the board is of the belief that its 72% investment in this operation is likely worth significantly more than the value attributed to the entire group based on its share price over the last 12 months.

Driggs added, “While the global economic environment remains challenging, we are confident that the actions we are taking to create greater focus on our core sectors and operations will enable us to execute our strategy more quickly and effectively to realise our long term growth ambitions."

Empresaria Group shares last traded at £34.70, down 2.25% on the day and 12.85% above the 52 week low of £30.75 set on 21 November 2023. The company has a market cap of £17.70 million.