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Sweden – Proffice’s revenues stumble but profits rise

21 November 2013

Swedish recruiter Proffice AB (PROED: SS) today announced revenue for the third quarter ending 30 September 2013 of SEK 1.07 billion (€119.2 million), a drop of -10% compared with SEK 1.2 billion (€132.1 million) last year.

However, the company reported an operating profit of SEK 50 million (€5.6 million), a year-on-year increase of +61% from SEK 31 million (€3.5 million) in 2012. Proffice achieved a profit after tax for the three months of SEK 44 million (€4.9 million), equating to a rise of +132% from SEK 19 million (€2.1 million) during the third quarter of last year.

Commenting on the results, Proffice CEO Lars Kry said: “In an economic climate that continues to be tough, we further increased profitability in all markets. EBITA reached SEK 50 million (€5.6 million), and the EBITA margin improved to 4.7%. The intensive action plan we initiated when the market gave way in the autumn of 2012 continues to have a positive effect, but the improved performance is also the result of a conscious effort to increase focus on margins across the Group.”

It was announced last month that the successor to Lars Kry would be Henrik Hӧjsgaard, who will assume the position of CEO during the first quarter of 2014. Mr Kry announced his resignation in August 2013.   

Despite signs of improved stability in Sweden, customers remain cautious. Revenue fell by -14% during Q3 2013 compared with last year, primarily due to the challenging market but also as a consequence of a change in Proffice’s customer mix. The proportion of revenue from major customers decreased, which benefited SME customers and affected both profitability and cash flow in a positive direction. Despite decreased revenue and the continuing effects of higher-than-normal guaranteed wages, operating profit increased by +60% compared with the same quarter last year.

Improved earnings were reported in Norway, with operating profit up by +44% in Q3 compared with last year. The economic market in Norway was characterised by a continued uncertainty during the quarter. Growth slowed and the company’s business was adversely affected by the new work and employment conditions brought about by the Vikarbyrå Directive. Revenue dipped by -5% year-on-year, but the company retains its high ambitions and optimism for Proffice Norway.

Proffice in Denmark once again delivered a positive result. Revenue tripled compared with the same quarter last year. Operating profit was positively impacted by the successful establishment of specialist areas, as well as the increasingly profitable recruitment business.

The company’s operations in Finland continued in the black during the quarter despite the enduring unsettled economic climate. Revenue more than doubled and the company achieved an operating margin of +6.5%, compared with an operating margin of -7.1% last year. The positive earnings trend in Finland is mainly due to the establishment of specialist company Proffice Aviation, but also to a conscious strategy to redirect the business towards hiring a larger proportion of white collar employees.

Lars Kry continued: “Thanks to our intensive action plan we are back up to a good level of profitability. However, we know that the third quarter is normally strong in calendar terms, and that the fourth quarter contains a large number of non-working days this year. In addition, there is uncertainty about how the market will develop, which means that we must continue to be able to quickly adapt to prevailing market conditions.”

“We will continue our long-term efforts to become the most successful staffing company in the Nordics. With our strong local sales culture, Proffice stands ready to strengthen its market position in all markets. By maintaining cost control, continuing to focus on margins, and being first with the best services, we will generate profitable growth and become an increasingly prominent player in the Nordic staffing market,” he concluded.

In early trading today, the company’s share price rose strongly by +12.8% to SEK 27.40 (€3.06), an increase of +57.3% compared with a year ago. Based on its share price, the company has a current market value of SEK 1.7 billion (€186.6 million). 

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