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UK – Impellam revenue up but profits fall in the half year

26 July 2012

Staffing firm Impellam (IPEL:LSE) reported today that revenue in the first half of the year exceeded expectations, growing to £590.9 million from £549.4 million a year ago. The increase in Group revenue was mainly driven by the UK and North American staffing segment while the firm warned that the permanent placement market was not as robust as planned.

Gross profit in the period declined to £86.0 million compared to £91.1 million a year ago while operating profit also slumped by £3.4 million to £12.8 million. Profit after tax was below last year at £9.3 million (2011: £11.6 million).

Chairman Cheryl Jones remained confident despite challenging market conditions, saying the firm maintained its operational resilience and financial strength. This, she said, “has enabled Impellam to continue to align its brands into clear market-facing businesses, through a restructuring of the divisional and group entities, which will be completed by the end of the financial year.

“EBITDA of £20.8 million for the first half of the year achieved the Group's expectations, despite tough trading environments in both the UK and North America and during a period of transformational change for the Group.

“Revenue growth of 7.6% exceeded plan, though margins have tightened under difficult current market conditions. However, focus on the quality of the revenue base should position the Group favourably as when markets recover.

In the UK the Staffing business increased revenue by +14% to £258.8 million but gross profit declined by -8% to £32.4 million. Operating profit was flat at £5.1 million. The Group said the business outperformed the market and its targets in terms of revenue generation in the period. However, margin pressures remained in place due to economic conditions.

Technical Solutions has seen revenue rise marginally by around +1% to £96.6 million. Gross profit declined by -6.2% to £12.1 million. Operating profit of the segment declined by £1 million to £4.4 million. Demand declined in some services and the firm predicts the markets to remain tough while permanent placements have been “depressed.”

The firm’s North American Staffing segment increased revenue by +6.1% to £87.6 million. Gross profit was up by +1% to £17.6 million while operating profit increased to £2.0 million from £1.4 million a year ago.

Tegrus, which covers medical & government services, increased revenue by +2.1% to £107.4 million with gross profit falling by -3.5% to £19.2 million. Operating profit rose by £1 million to £7.0 million and the firm said contract margins have declined in the period.  

Revenue at Carlisle Support Services remained flat at £40.5 million and gross profit declined by -23% to £4.7 million. Operating profit was also down, reaching £0.1 compared to £1.1 million a year ago as key markets deteriorated.  

Impellam Group conducts business primarily in the UK and the US, with smaller operations in Australia, Ireland, New Zealand and mainland Europe. The Group employs around 6,000 people and is ranked 19th in Staffing Industry Analysts’ latest ranking of Largest Global Staffing Firms 2012.

In early trading this morning, the company’s share price was up by +0.4% to 316.25 pence, down -13.6% from a year ago and -16.8% below its 52-week high of 380.00 pence set in July 2011. The firm has a market value of £139.00 million. 

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