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Australia – Skilled Group hit by mining slowdown

02 May 2013

Australian staffing company Skilled Group (SKE:ASX) is feeling the effects of a slowdown in the country’s lucrative mining sector, the company said in a presentation released to shareholders this week.

Skilled Group dominates the Australian staffing market with almost twice the market share of its closest rival Hays, according to research by Staffing Industry Analysts.

Giving an update on current trading conditions, the recruiter said it experienced continued volatility and reduced demand in the mining sector. This was coupled with margin pressure from mining clients seeking reduced costs. But rationalising suppliers in the mining sector also provides opportunities for increased volumes over time, the company said.

The firm overall reported weak employment growth nationally, but improved activity in infrastructure, telecommunications and rail sectors, driven by an increase in construction and rail projects.

The company’s Swan business, which provides engineering and technical staff to the oil and gas, petrochemical and mining sectors, has also been impacted by the slowdown in mining and related engineering services. The average weekly contractor hours have been reduced by clients who are keen to cut costs.

The firm also said it expects to deliver at least AUD 10 million in cost reduction for the 2013 financial year.

Skilled Group recently posted a +23% rise in net profit during the six months to December 2012. Sales revenue was up +4% to USD 999.5 million (AUD 973.6 million) in the period.

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