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UK – Pricing pressure results in losses at HR GO

01 October 2013

Recruitment firm HR GO PLC (HRG:ISDX) reported revenue of £42.1 million for the six months to 30 June 2013, down -2% from £43 million a year ago. Gross profit for the period also declined, down by -8% to £6.96 million from £7.5 million, year-on-year.

The company, headquartered in Kent, reported an operating loss of £499,000 compared with an operating profit of £355,000 for the same period last year.  

Jack Parkinson said: "Pressure on temp margins remained with the Group achieving a 16.5% gross profit, compared with 17.5% in the first half of 2012. This -1% margin erosion represents £420,000 of gross profit, which is a direct result of continued pressure in our traditional high street markets as well as increased costs passed on to group from certain of our payroll providers."

But he added: "Our current investment in technology is now complete and will begin to directly impact transactional costs in front and back office, as well as enhancing our expansion into niche markets.”

"We have continued to invest in the group's specialist recruitment brands in response to market opportunity as well as new investments in start-up divisions in driving and retail, which we see as complementary to our traditional high street offering," he concluded.

HR GO's overheads increased by £100,000 to £7.5 million in the first-half of the year which, combined with the margin erosion and reduced one-off other operating income, resulted in the overall loss.

Company Chairman Jack Parkinson said that the Kent-based company had invested heavily during the period and was optimistic about an improvement in 2014.

Mr Parkinson said: "We are optimistic about high street business volumes recovering as the economy improves in 2014 and expect our new systems and processes will significantly improve customer service, company performance and provide a satisfactory return for the shareholders."

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