Empresaria (AIM: EMR), the international specialist staffing group, reported revenue today for the year ended 31 December 2023 of £250.3 million, a fall of 4% on a constant currency (CC) basis and also down 4% on a reported basis.

The group's 2023 results reflect tough market conditions. Net fee income down was 11% on a constant currency basis. The fall in net fee income reflects the revenue mix with net fee income from permanent placement down 25% and temporary and contract down 10% partially offset by a strong performance in offshore services which grew 8%. 

Adjusted operating profit was down by 48% (CC). Higher net interest costs due to the continued increase in base rates during the year are reflected in a 61% decrease in adjusted profit before tax and, when combined with a greater weighting of profit towards the group’s non-controlling interests, a 93% decrease in adjusted, diluted earnings per share.

Chief Executive Officer, Rhona Driggs said, "We experienced challenging market conditions throughout 2023 across all our markets and sectors.  In particular, our permanent placement business declined significantly as client and candidate confidence remained low.  Against this backdrop I am pleased to report that our Offshore Services operation proved their strength and resilience, delivering year-on-year growth.”

“We continue to focus on simplifying our operations and have made substantial progress in improving our operating models in our core sectors (Professional, IT, Healthcare) in order to drive increased productivity and maximise opportunities with our clients. We believe these changes will be key in driving long-term value,” Driggs said. 

Revenue by segment

The Professional segment saw good growth in temporary and contract revenue, particularly from lower margin aviation contracts, which drove an overall increase in revenue of 5.6%. The significant fall in permanent placement activity, particularly across APAC and the UK, meant that overall net fee income was down 22% year-on-year.

In IT, revenue was down 13% and net fee income was down 23% reflecting the significant fall in global IT staffing demand.

Healthcare revenue was down approximately 48%, with net fee income down 34%, driven by US Healthcare operations.

Property, Construction & Engineering, showed a small improvement in revenue which was up 2.2% year-on-year with net fee income down 9%.

The group’s Commercial sector showed itself to be fairly resilient with revenue down 2.5% and net fee income down 2% with a strong performance in Chile partially offsetting weaker ones elsewhere.

Offshore Services performed strongly despite the market conditions.

When looking at group revenue by geography, the UK & Europe saw revenue reduce by 6% (8% in constant currency), net fee income reduced by 12% (13% in constant currency) and adjusted operating profit was down by 36% (38% in constant currency). Revenue totalled £116.8 million in UK & Europe.

In the UK alone, net fee income reduced by 21% year-on-year with operating profit down by two-thirds. The fall in net fee income was primarily driven by a reduction in permanent hiring, which was down 30%, while temporary and contract net fee income was down 9%.

In the APAC region revenue increased by 4% (9% in constant currency) and net fee income reduced by 14% (10% in constant currency). APAC revenue totalled £51.9 million.

In the Americas, revenue fell by 11% (12% in constant currency) and net fee income fell by 30% (31% in constant currency). Revenue totalled £55.9 million.

Looking ahead Driggs said, “Challenging market conditions are expected to continue throughout the first half of 2024, but I am confident in our ability to navigate through this environment and we are well positioned to respond as the market recovers."

Chairman Penny Freer added that the group is “confident that the actions we have taken, and continue to take, to simplify our leadership and operational structures and create focus around our core operations, alongside the strength of our Offshore Services offering, leave us well positioned to benefit as and when market conditions improve and will enable us to realise the growth potential of the group.”

Empresaria Group shares last traded at £35.65, down 2.33% on the day and 15.93% above the 52-week low of £30.75 set on 21 November 2023. The company has a market cap of £18.20 million.