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South Africa – Adcorp reports healthy growth figures

23 May 2013

South Africa’s largest staffing firm, Adcorp (ADR:JNB), reported revenue of USD 900.3 million (ZAR 8.6 billion) for the year ended February 2013, a +34% jump from a year ago. Gross profit in the year rose +26% to USD 163.3 (ZAR 1.56 billion) while operating profit improved by +40% to USD 29.9 million (ZAR 285.97 million). Total normalised profit was up +38% to USD 28.2 million (ZAR 269.46 million).

“The past financial year has been an extremely positive one for the group from a performance, strategic and an acquisitive perspective. Much has been achieved and the group is particularly well positioned for the future,” said Adcorp CEO, Richard Pike.

The group's blue collar operations continued to perform well showing both good revenue and profit growth. The division also benefited from its expansion into other African markets such as mining, oil, gas, exploration and related infrastructural development.

The firm’s white collar operations were bolstered by the acquisition of specialist IT resourcing and solutions business Paracon which “has performed ahead of expectations and has significantly transformed the group's delivery capability in this area,” said Mr Pike.

During the year, Adcorp acquired an Australian specialist IT resourcing business, Paxus, for ZAR 616 million. “Paxus is an important addition to the group both in terms of tapping into a significant new market as well as in terms of the strategic opportunities this acquisition presents for both Paxus and Paracon,” said Pike.

The Business Process Outsourcing (BPO) and training operations both experienced a difficult trading environment whilst the financial services business performed well.

South Africa is currently debating proposed legislation aimed at further regulating labour broking in South Africa. But Mr Pike considers it unlikely that such legislation will be promulgated much before the end of the year.

“Against the background of a volatile labour environment, legislative uncertainty relating to labour broking well as an uncertain global economy, the group has been able to achieve double digit profit growth of which I am extremely proud,” he said.

“The group is also better diversified across different geographies than ever before and is far less reliant on the proportion of its profit derived solely from labour broking. Internationally, Africa holds much potential as does the resource, energy and infrastructure boom currently playing out in the Southern Hemisphere and in many emerging markets. Given that our operations now reach into a number of African countries, Australia and India whilst we also have a formal alliance with the world's second biggest staffing provider, Randstad, we are extremely well positioned to take advantage of global opportunities.”

In early trading, the company’s share price dropped slightly by -0.3% to ZAR 2,892, up +8% from a year ago. Based on this stock price, the firm has a market value of USD 278.5 million (ZAR 2.66 billion). 

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