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Australia – Chandler MacLeod posts higher revenues

20 February 2013

Chandler MacLeod (CMG:ASX), the third-largest recruiter in Australia, expects the lack of business confidence to continue although the firm projects profits for the six months to June to be in line with expectations.

The staffing company, which recently acquired healthcare firm Vivir, today reported that revenue for the six months to December 2012 rose by +3.9%% to AUD 801.6 million (USD 828.3 million) compared to the same period in 2011. ‘Underlying’ revenue was up a slightly more modest 3.7%. The firm has focused on significant cost saving measures and posted an increase in business activities driven by recent acquisitions.

Low business confidence reduced demand for permanent recruitment. The company has decreased the proportion of revenue it derives from permanent placement (13%) and increased the proportion from managed services (18%) and specialist products such as consulting and Aurion talent management software (15%).

The gross margin of 13.1% was a decline of -4% over the prior period.

EBITDA before acquisitions and restructuring costs was up +13% to AUD 22.5 million (USD 23.2 million) but the reported figure was down by -11%.

Net profit after tax in the period was down -33% to AUD 5.5 million (USD 5.7 million) with the firm seeing restructuring and acquisition-related costs of around AUD 5.1 million (USD 5.3 million).

Revenue from staffing services fell by -3% to AUD 664.0 million (USD 686.0 million) due to a slowdown in contract recruitment. The firm posted growth in the engineering and construction sector, offsetting a decline in the manufacturing industries. The firm said contract hours fell because costumers focused on costs.

For the second half (January to June 2013), the company expects pressure on margins to continue and that profits will be in line with the first half (excluding the impact of the Vivir acquisition).

Following today’s announcement, the company’s share price fell -7.8% to AUD 0.535. The firm has a market value of AUD 272.41 million (USD 281.5 million).

Chandler Macleod has a market share of over 5%, according to research on the Australian staffing market by Staffing Industry Analysts. Founded in 1959, the company provides temporary workers in a range of specialist sectors and has grown rapidly following the acquisition of Ross Human Directions in February last year. 91% of revenue is derived from Australia with the remainder coming from New Zealand, Asia, UK and Ireland.

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