Accordant (AGC:NZC), the New Zealand-based temporary staffing provider, announced a market update yesterday for the March 2024 financial year. Revenue was down 9% year to date, with net profit predicted to be materially lower than the NZD 2.0 million (USD 1.2 million) reported for the prior year.

The group said a much softer trading environment experienced in the December quarter further impacted the final quarter of the year.

“In late October when we reported our results for the September half year, we expressed cautious optimism that trading conditions would improve following certainty of government, increased business confidence and a healthier outlook for interest rate stabilisation,” the group stated.

“The economic and trading environment has clearly remained more uncertain than we would have expected. While business confidence, as measured by the ANZ Business Outlook, held up well in January 2024, job ads remain restrained in February 2024 after falling significantly with MBIE’s (Ministry of Business, Innovation and Employment) Jobs Online measuring a drop of 28.6% in 2023,” Accordant said in its update.

The company said the government has asked public sector agencies to identify savings in back-office expenditure in the range of 6.5% to 7.5%, which Accordant expects will impact the areas of consulting and contracting especially.

JacksonStone & Partners, a subsidiary of Accordant, has already started feeling some impact of these intended cost cuts, with revenues from public sector contracting and permanent placements down 15% against prior year to date. It is expected a renewed government focus on permanent placements will benefit the business mid-term, as executive and managerial changes drive further demand for talent over the coming year.

While subsidiary Madison have experienced the same decline in government contracting, the more widespread slowdown in temporary and permanent entry level and support roles has driven a 20% drop in revenues and Accordant expects to review the carrying goodwill value for the business unit as of 31 March 2024.

Hobson Leavy, acquired in 2023, performed according to the group’s expectations during its first year in its ownership. The company said that while not immune to the current economic climate, it has managed to navigate the executive recruitment market well.

Meanwhile, following senior leadership changes and a national restructure, Absolute IT is operating more leanly in a subdued environment for technology recruitment. Revenues remained 15% lower against the prior year.

AWF will have steadily grown its deployed workforce over the last 12 months with revenues up 5% against prior year thanks to a purposeful focus on civil infrastructure, logistics and roading, while taking a cautious approach to the wider construction market that remains challenged.

The group stated, “While we have responded to current market conditions by reducing our operating costs in the second half of the year, we are mindful of retaining suitable capability and capacity to respond to market changes. Our sales, marketing and business development capability remains strong and active.”

“Positive earnings and strong banking relationship all provide a level of stability at this time and while we do not expect an immediate upturn in trading conditions, we are planning to further expand our offerings in FY25 to meet long term demand in additional growth markets,” Accordant stated.

Accordant set a new 52-week low during yesterday’s trading session when it reached NZD 0.84 (USD 0.51). Over this period, the share price is down 49.40%. Shares last traded at NZD 0.85 (USD 0.52), no change on the day. The company has a market cap of NZD 29.75 million (USD 18.0 million).