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UK – Empresaria expects better performance in 2013 after revenue falls

20 March 2013

International staffing firm Empresaria (EMR:LSE) expects better group performance in 2013 after the firm today posted a decline in 2012 sales with revenue falling -8% in its temporary staffing business. The firm reported flagging demand across the UK and Germany while countries in Asia posted higher sales figures.

The +12% increase in permanent staffing revenue could not offset the overall fall in total revenue, which was down -4% in constant currency to £194.3 million.

Gross profit in the year fell -3.5% in constant currency to £43.9 million.  Operating profit jumped +57% to £4.4 million, helped by tight costs controls though the increase was only +2% when adjusted to exclude amortisation of intangible assets, exceptional items and movements in the fair values of options. Profit after tax also improved from £0.4 million in 2011 to £1.9 million in 2012. The company faced restructuring costs of £1.1 million in Germany, following office closures and redundancies. However, this was partially offset by a £0.4 million reduction in the provision against claims for retrospective pay and social security in Germany.  The company stated that it had settled a large proportion of the historic claims and only had a small number of additional claims arise in the year.

Chief executive Joost Kreulen said: “In 2012 we delivered an improved profit performance over the prior year against the backdrop of challenging worldwide staffing markets and ongoing economic uncertainties.

“We remain focused on delivering profitable growth, optimising our delivery models and tightly managing costs to improve conversion ratios. We closely monitor the productivity and efficiency of the whole organisation and this will continue to be a key area of focus in 2013, as the global economic conditions remain difficult and changeable.  We are also looking at where we can make further investments in our brands to help them expand internationally.”

Banking remains tough  

Performance across staffing markets were mixed. Challenged by the banking and finance sector in the UK, revenue in the country dropped -1% to £66.5 million with temporary fees falling -1% and permanent fees rising +3%. Gross profit in the UK remained flat at £16.0 million.

“Market conditions during the year in the UK were poor, with uncertainty and poor visibility due to the double-dip recession. Within the infrastructure and construction sector business, there was a small decline in permanent sales, but an increase in temporary sales,” the firm said.

In continental Europe, revenue was down -19% to £83.2 million with the firm cutting staff numbers by -10%.  Gross profit declined -20% to £15.7 million. “The market conditions across Europe have been challenging. Even Germany has not been immune,” said the recruiter. It expects demand in Germany to fall by up to -20% in the short-term, following new equal pay directives for temporary workers. Given lower demand, during 2012, the company closed or merged 13 branch offices across Germany and Austria and reduced staff numbers by 13% on average.

In the Baltics, the firm’s healthcare business saw worsening market conditions while its specialist businesses in the Czech Republic and Slovakia posted small profits on the prior year.

In the Rest of the World, the firm’s fastest growing region, revenue grew +14% to £44.6 million with gross profit rising +9% to £12.2 million. Temporary staffing revenue from Japan, Australia and the outsourcing business in Chile grew by +13%.

In Japan, profits grew by over +40% with the company expecting a strong performance in 2013. In South East Asia revenue grew strongly while the firm’s Singapore business posted losses for the second year in a row. Revenue in India was flat while the firm reported steady revenue and profit growth in China.  In Australia, revenue jumped +20% despite weaker market conditions. After exiting a major contract, the firm reported losses in Chile.

Looking at 2013, the company announced that it was “cautiously optimistic”. In a statement on current trading and outlook, Empresaria told investors that “Global economic conditions remain uncertain and there are many risks to the fragile recovery seen in some of our key markets. However, due to the actions taken during 2012, we expect a better Group performance in 2013.  In particular, the operational improvements made in Germany and Chile means both are better placed for the current year and the investments made in Singapore should contribute more positively from the solid platform now in place.” In early trading, the company set a new 52-week high with the share price jumping +9% to 37 pence, up +42% from a year ago. Based on its stock price, Empresaria has a market value of £15.15 million. 


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