Staffline Group (STAF: LSE), the UK-based recruitment and training organisation, reported revenue is set to total £938.2 million for FY 2023, up 1.1% over the year.

The group provided a trading update for the year ended 31 December 2022 as well as the outlook for FY 2024. Staffline reported underlying operating profit in line with market expectations against challenging trading conditions in FY 2023.

Underlying operating profit stood at £10.1 million, down 15.8% over the year.

Within the Recruitment GB business, full year results were broadly similar to the prior year, which compares favourably to the wider recruitment sector, driven by market share gains combined with additional streamlining and tight control of the cost base. Weak demand in H1 2023 and lower permanent fees throughout the year held back the strong underlying trading result achieved in the second half. During 2023, the business took focused actions to reduce costs, which will deliver circa £3.0 million of annualised savings. As a result, a non-underlying restructuring charge of circa £1.8 million was incurred.

The division benefitted, particularly in H2 2023, from its strategy of driving organic growth, expanding key strategic partnerships with GXO Logistics, AM Fresh Group, Sainsbury Argos and Morrisons, while also renewing contracts with key customers such as Tesco and M&S across the year. This contributed to the traditional H2 trading peak in the run up to Christmas delivering in line with expectations, supporting a strong H2 2023 result.

In Recruitment Ireland, the division reported a solid performance with a challenging market in Northern Ireland in contrast to the Republic of Ireland. With an historically higher exposure to the white-collar permanent hiring market than Recruitment GB, underlying operating profit was more affected by lower levels of demand as well as local political uncertainty. However, during Q4 2023 the business secured a significant contract win with the Republic of Ireland's Garda (national police and security) which commences in 2024.

PeoplePlus's Skills training division was restructured during the year, with a shift away from in-person classroom-based training to focus on digital training. These results are now disclosed as being ‘discontinued’ in its FY 2023 results. Its core sectors of Justice and Employability (including Restart) continued to deliver. However, a number of recent profitable contracts came to their conclusion, alongside a quieter commissioning period. The group said that although the near-term bid pipeline is substantial, any benefit will only be expected to flow into the group from 2025 and beyond.  

Albert Ellis, CEO of Staffline, said, "I am grateful for the commitment and support of the thousands of hard-working staff who are responsible for delivering this resilient result.

“I am delighted too, with the comparatively strong trading performance we achieved in FY 2023, despite facing significant macroeconomic challenges during the year,” Ellis said. “Our healthy balance sheet has enabled us to support organic growth and ensure we delivered labour at scale, to significant customers, such as GXO Logistics, Tesco and M&S during times of seasonal peak demand.”

“I firmly believe there is significant growth potential and, as inflation and pressure on labour markets begin to ease, remain optimistic about the prospects for further organic growth generated from within the group,” Ellis continued.

Looking ahead, the group said its recruitment businesses is set to deliver progress into 2024 despite widely reported headwinds in the sector.

In PeoplePlus, political uncertainty, low levels of unemployment and the impact of new contract revenue streams only flowing from 2025/6, will reduce short term profitability by around two thirds, in 2024, versus expectations. The division is, however, now transformed with a more efficient cost base and new management, focusing on its two core markets, Justice and Employability, where it has good market share and strong prospects.

Despite the macro uncertainty, the board said it remains confident that the group’s extensive scale and reach, coupled with its proven track record of exceptional delivery, will continue to increase its market share and maximise opportunities as the economic recovery unfolds.

Following the profit decline announced today, Staffline Group set a new 52-week low during today's trading session when it reached £22.00. Over this period, the share price is down 31.94%. The company last traded at £22.46, down 8.33% on the day. The company has a market cap of £36.55 million.