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Australia – Skilled Group performs well in difficult market

14 August 2013

Skilled Group (SKE: AXE), the largest staffing firm in Australia, reported revenue for the year ending 30 June 2013 of AUD 1.87 billion (USD 1.7 billion), a fall from AUD 1.89 billion (USD 1.72 billion) a year ago, equating to a drop of -1.1%. However, profit for the period increased to AUD 56.2 million (USD 51.2 million) from AUD 49.3 million (USD 45 million) a year ago, a rise of +13.9%. 

Revenue for Skilled Group’s Workforce Services business segment fell to AUD 918.3 million (USD 837.4 million) from AUD 933.5 million (USD 851.3) a year ago, a drop of -1.6%. EBITDA margin fell from 4.9% for 2012 to 4.4% for 2013. Workforce Services was impacted by the slowdown in mining and related services, but offset by improved activity in infrastructure, telecommunications, and rail sectors. Margins were impacted by continued pricing pressure from clients. Half of all revenue comes from the Workforce Services segment, which specialises in blue collar trades; including mining & resources, primary manufacturing, and food & pharmaceuticals.

Revenue for the Technical Professionals business segment fell from AUD 507.4 million (USD 462.7 million) for 2012 to AUD 488.9 million (USD 445.8 million) for 2013, a fall of -3.6%. EBITDA margin fell from 5.7% to 5.5% year-on-year. The slowdown in mining and related activity impacted revenue and profit growth in this business segment, which was partially offset by lower indirect costs. The Technical Professionals business segment provides IT&T, executive, professional services, technical professional and medically rained casual, contract, and permanent staffing solutions. A quarter of group revenue comes from the Technical Professionals segment.   

Engineering and Marine Services was the only business segment to report revenue growth for 2013. Revenue increased by +2.7%, from AUD 456.5 million (USD 416.3 million) in 2012 to AUD 468.8 million (USD 427.5 million) for 2013. EBITDA margin increased from 8% to 8.8% year-on-year. Improved revenue and earnings were achieved as a result of increased activity in current and new project and maintenance contracts, primarily in mining. Engineering and Marine Services provides contract maintenance and engineering services, offshore marine staffing, vessel chartering, and management services. For the 2013 financial year, this business segment accounted for a quarter of total revenue.

Looking forward, trading conditions are expected to remain challenging in some business segments with subdued activity levels expected to continue into the first half of 2014. Reduced activity and pricing pressure particularly in the mining sector is predicted to have the biggest impact.  The acquisition in July 2013 of Broadsword, a Northern Territory based marine services provider, will provide further capacity to deliver services to oil & gas projects.

Initiatives in the 2014 financial year are expected to deliver a further AUD 10 million (USD 9.1 million) cost savings, and will include continued reductions to the cost base, continued simplification of back-office processes, and a move to a single national reporting structure for the core Workforce Services division.   

Skilled Group provides workforce solutions across Australia and New Zealand with overseas offices in the United Kingdom, Malta, and the United Arab Emirates. These include onshore and offshore total workforce management, flexible labour solutions, and project-based workforce solutions.

In trading today, the company’s share price rose +1.56% to AUD 3.25 (USD 2.96), an increase of +45.24% from a year ago. Based on its share price, the company has a current market value of AUD 758.9 million (USD 692 million).  

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