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Sweden – Wise Group struggles in Q3

21 November 2013

Swedish staffing firm Wise Group AB (WISE: SS) reported revenue for Q3 2013 of SEK 99 million (€11.1 million), a fall of -2.2% from SEK 101.2 million (€11.3 million) for the same three months last year. The company reported an operating loss of SEK 986,000 (€110,230), a sharp drop from an operating profit of SEK 5.6 million (€626,060) a year ago.

Wise Group reported a net loss of SEK -797,000 (-€89,100) for the third quarter, down from a net income of SEK 3.8 million (€424,825) for the same period last year.

Roland Gustavsson, CEO of Wise Group, commented: “The third quarter is generally the weakest quarter in our industry, and also for Wise Group. This year was no exception and the quarter, as a whole, was slightly worse than expected. August and September developed well, but July negatively impacting earnings. We have seen positive developments in our HR Services and Consultant Recruitment businesses. We have also seen a clear trend of increased sales and improved earnings each month and now see a light at the end of the year.”

“As I wrote in the CEO’s report for the second quarter, during the past year we have invested heavily in future growth. We have hired a large number of new employees, coordinated our activities geographically, and opened a new in Copenhagen. These investments impacted our results to some extent but have started to take effect during the third quarter.”

“Our operations in Denmark have started to pick-up… and we now have a foothold in the market and greater opportunities for the business. During the third quarter the long-running dispute with Norwegian company HR Manager was resolved. The ruling means that HR Manager must pay Wise Group SEK 3.1 million (€346,570) plus SEK 800,000 (€89,435) in legal costs. It is good that we can now drop this matter,” Mr Gustavsson concluded.

Norway's Supreme Court Supreme Court in Oslo rejected HR Manager’s appeal regarding the judgment in a contract dispute between Wise Group subsidiary Edge HR AB and HR Manager AS. 

Wise Group’s recruitment division reported its lowest revenue in five quarters during the third quarter of 2013. Year-on-year revenue from recruitment fell by -15.8% to SEK 16 million (€1.8 million) from SEK 19 million (€2.1 million) in Q3 2012.

Consultant recruitment revenue during Q3 2013 marginally surpassed that of Q3 2012, growing by +1.3% from SEK 44.8 million (€5 million) in 2012 to SEK 45.4 million (€5.1 million) this year. HR Services also reported marginal year-on-year growth of +0.5% from SEK 37.4 million (€4.18 million) in 2012 to SEK 37.6 million (€4.2 million) this year.

Mr Gustavsson concluded: “It is therefore my opinion that the past year’s efforts to attract and retain the talented employees to ensure long-term growth and profitability have started to deliver. I remain confident that our strategy is right and that, provided we have stable economic development, we are well positioned to deliver growth and profitability for the rest of the year.”

In trading today, the company’s share price fell by -3.3% to SEK 1.16 (€0.13), a drop of -6.5% compared with a year ago. Based on its share price, the company has a current market value of SEK 179.8 million (€20.1 million). 

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