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UK – Impellam trading meets expectations

19 June 2013

At today’s annual general meeting, UK recruiter Impellam (IPEL:LSE) is expected to say that trading in the first five months of 2013 has been “broadly” in line with the board's expectations as business activities are holding up in the UK and North America. 

Impellam operates primarily in the UK and the US, with smaller operations in Australia, Ireland, New Zealand and mainland Europe. The firm is ranked among the 20 largest staffing companies in the world.

In a statement issued to shareholders this morning, the firm said: “Our United Kingdom and North America Staffing businesses are both reporting increased activity and growth in net fee income, year over year.  Our North America business returned to year on year net fee income growth in Q2 of 2012 and we expect the United Kingdom business to report similar growth in Q2 this year.  Both businesses are also reporting increases in EBITDA when compared to prior year periods as a result of both net fee income growth and improvements in efficiency.”

But market conditions remain challenging for the firm’s Medacs Healthcare division as volumes and net fee income have come under pressure. “We are also seeing increased costs associated with both enhanced compliance requirements and in the sourcing of the required medical professionals for the demand available.  We therefore expect to see both net fee income and EBITDA compression in the first half,” Impellam said.

The firm’s Carlisle Support Services business is seeing “little or no recovery” in demand in the retail market.  Costs related with recent contract wins are also depressing the gross margin, the recruiter warned.

After facing non-recurring items of £14.7 million last year mainly related to restructuring processes, Impellam today said “there will be no repeat of the prior year restructuring charges.”

Despite the reassuring update, in early trading this morning, the company’s share price dropped by nearly -9% to 380 pence, an increase of +13% from a year ago. Based on this stock price, the firm has a market value of £182.71 million.


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