AWF 1H profit slides 57% as predicted Christchurch growth doesn’t appear, Panacea exited

Thursday 14th November 2013

AWF Group reported a 57 slump in first-half profit as its predicted growth in Christchurch didn’t eventuate and after the country’s biggest supplier of temporary staff exited its Panacea Healthcare unit.

Net profit fell to $1.9 million, or 7.2 cents per share, in the six months ended Sept. 30 from $4.4 million, or 16.7 cents, a year earlier, the Auckland-based company said in a statement. Stripping out the gains from the sale of its Panacea unit a year earlier, underlying profit fell 19 percent to $1.9 million, while sales rose 0.9 percent to $62.5 million.

AWF ramped up staff levels in Auckland and Christchurch on the expectation those regions would need temporary workers, and while Auckland met expectations, the projected growth didn’t occur in Christchurch, the company said.

Government figures this month showed employment grew 4.1 percent in the six months ended Sept. 30, while Canterbury region employment fell 1.3 percent over the same period.

Competition among temporary recruitment firms has ramped up and the company’s rivals chased lower margins, something AWF said it chose not to pursue, losing two key clients in the process.

“Trading conditions have remained challenging throughout October and into November, although seasonal improvement is evident,” the company said.

“Whilst the group is not expecting to recover lost ground from the first half and in fact may see a little more slippage compared to the same period in 2012, it is confident that aggressive cost management and development of recently added new business will see a return to growth in 2014,” it said.

The company plans to buy white-collar recruitment firm Madison Group for as much as $36 million, and will put the acquisition to shareholders at a special meeting on Nov. 18.

The board declared an interim dividend of 6.4 cents per share, unchanged from a year earlier, payable on Dec. 6 with a record date of Nov. 29.

The shares fell 0.7 percent to $3.01 today, and have climbed 26 percent this year.

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