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UK – Empresaria revenue down despite a strong performance in the ‘Rest of the World’

05 September 2013

International staffing firm Empresaria Group (EMR: LSE) reported revenue of £95.6 million for the six months ending 30 June 2013, a fall of -2% compared with £97.8 million for the same period last year. An operating profit for the period was £1.9 million, an increase of +6% compared with an operating profit of £1.8 million a year ago.

One of Europe’s largest recruiters, according to research by Staffing Industry Analysts, Empresaria reported that revenue from temporary staffing decreased by -3% year-on-year. Permanent recruitment revenue increased during the period by +7%, increasing by +12% in the Rest of the World and +1% in the UK.

Joost Kreulen, CEO of Empresaria, commented: “Despite a fall in revenue and net fee income we have seen another strong performance from the Rest of the World region, which now represent 30% of Group net fee income. The UK has been fairly stable and shows signs of improving over the second half of the year. The markets in Continental Europe have been the most challenging, but cost controls have helped offset lower net fee income.”

In the UK, revenue fell by -1% in the first half of 2013 to £33.6 million, down from £33.7 million in 2012. Temporary sales decline by -1% during H1, with the temporary margin falling -0.5%, as a result of mixed sales in the construction sector. Operating profit in the UK in the first six month of the year was £900,000, a fall of -18.2% from £1.1 million a year ago. Net fee from the UK was £7.8 million, down from £7.9 million last year. UK net fee income accounts for 38% of Group net fee income, up from 35% a year ago.

The company is confident that the economic outlook in the UK is more positive than six months ago, with key business confidence indications reflecting improved confidence. Looking forward, Empresaria believes that the group is well placed to benefit from increased demand, with the prior year’s comparative figures including the slowdown due to the Olympic Games.   

Continental Europe produced revenue in H1 2013 of £38.6 million, a fall of -11% compared with revenue of £43.3 million a year ago. Net fee income fell by -21% from £8.5 million in 2012 to £6.7 million in 2013. Continental Europe consists of Austria, the Czech Republic, Estonia, Finland, Germany, and Slovakia. Group net fee income from these countries during H1 2013 accounted for 32% of total Group net fee income, down from 38% last year.

The revenue decline in Continental Europe was predominately in temporary sales, as 2012 included a significant one-off temp-to-perm fee in Finland that did not occur in 2013. As expected, the introduction in Germany of the new equal pay surcharges, of up to 50% on temporary pay, impacted gross profit. Restructuring of German operations has been substantially completed. The provision for retrospective pay and social security in Germany stands at £900,000 as of 30 June 2013. In the Baltic region, the Group’s healthcare business experienced a decline in net fee income of -44%. The significant decline is partly due to the temp-to-perm fee in 2012 not repeating this year but also due to increased competition in the core Estonia market.   

The Rest of the World region was the only region to report revenue growth, with a +12% during the first half of 2013 to £23.4 million from £20.8 million in H1 2012. Net fee income increased by +6% during the period, up from £6 million last year to £6.4 million this year. Net fee income from the Rest of the World region grew from 27% last year to 30% this year. 

Improved performances in Chile, Singapore, Hong Kong, and Japan contributed to the improved results. The Japanese business recruited six additional consultants specialising in permanent recruitment. In India, the recruitment process outsourcing business grew strongly following a restructure in 2012, with growth predominately coming from the UK and US. Singapore and Hong Kong are poised to achieve a break-even position over the first half of the year, an improvement on past performance. The Group’s Southeast Asian executive search brand, Monroe, reported a small decline in profit, following the investment in new staff and office space. Chile reported a small loss in the first half of the year as the business finalised its exit from higher risk contracts. The Group also operates in Australia, China, India, Indonesia, Malaysia, and the Philippines.

Looking forward, the Group expects the markets to remain changeable but is confident in its ability to deliver profitable growth due to increasing signs of improving economic conditions. The company remains focused on improving the efficiency of operations and delivering sustainable profit growth. Based on their performance to date, Empresaria remains confident that earnings for the full year will be in line with market expectations.

In trading today, the company’s share price fell by -7.25% to £0.32, an increase of +29.52% compared with a year ago. Based on its share price, the company has a current market value of £14.3 million. 


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