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UK recruiter Rethink Group (AIM: RTG) has seen weak trading in the last two months with the firm expecting full-year financial results to be below market expectations, the Group reported in an interim statement on Wednesday.
“In July and August, the recruitment division experienced an unexpected decline in activity which impacted revenues and profits as a number of permanent placements failed to complete,” said CEO Jon Butterfield.
“Although activity levels have since returned to expected levels in September, and pipeline business is robust, the weak performance in the two months will not be recouped.”
In the first half of the year, the staffing company saw revenue increase by +28.2% to £44.1 million from £34.4 million a year ago. At the same time, gross profit was up +33.3% to £10.4 million with the gross margin improving to 23.6% from 22.8% year-over-year.
But earnings dropped in the period with profit from operations falling by -15.8% to £0.45 million, compared to £0.54 million a year ago. Profit after tax was also down, seeing a decline of -14.5% to £0.26 million.
The company derives the majority of its revenue from recruitment and talent management services. The firm’s largest recruitment subdivision, ReThink Recruitment, saw organic growth of +35.6% in the first half of 2012.
Overall, revenues from staffing services has risen by +93% to £27.4 million, including sales from recruiter Berkley which was acquired last year. Gross profit from the recruitment division has also surged by +62.2% to £7.3 million.
In the first half of 2012, the company’s talent management business saw a decrease in revenue which fell to £14.4 million from £18.4 million a year ago. But gross profit in this division increased by +9% to £2.0 million.
Rethink Group provides business services through three divisions, including recruitment, talent management and technology. The firm operates from the UK, Ireland, Singapore, the US and the Middle East.
In early trading this morning, the company’s share price plummeted by -26.8% to 6.50 pence with the firm setting a new 52-week low. Rethink has a market value of £10.06 million.