AWF posts 37% jump in full-year profit as companies hire more staff

Thursday 28th May 2015

AWF Group, the country’s largest recruiter and labour provider, posted a 37 percent rise in full year profit, with the 2013 purchase of recruitment firm Madison Group fully reflected in its results for the first time.

The Auckland based company delivered a significant lift in earnings for the year ended March 31 in line with guidance, with revenue up by a third to $197.5 million and net profit rising to $5.4 million. Underlying earnings after tax, which the board says more clearly reflects the business’s operating performance, rose 45 percent to $6.8 million, or 25.8 cents a share.

The board declared a final dividend of 8 cents per share, payable on July 1, taking the total dividend for the year to 15.2 cents which represents an 8.6 percent increase overall.

It also changed the name of the parent company to AWF Madison Group, effective from tomorrow, to reflect Madison’s contribution and to build on both brands. The Madison purchase was a bid by AWF to diversify away from its core base of blue collar workers into white collar recruitment.

Chief executive designate Simon Bennett, who takes over in June, has been running the Madison group.

AWF chairman Ross Kennan said the full year results validate the acquisition. While the Madison business had delivered steady growth, there had been more mixed results in the core AWF business.

“The economic impacts of a slowdown in activity throughout much of regional New Zealand continued to provide many challenges across AWF’s 36 branches," Kennan said. "However, the Auckland, Wellington and Christchurch markets are performing strongly.”

Bennett said as the economy has improved, the market for permanent rather than temporary staff has grown and, consequently, he’s looking to introduce permanent recruitment to the blue collar AWF side of the business in the coming financial year. Often temporary staff AWF has provided end up getting hired as full time staff just a couple of months later and it has missed out on the full benefit of that.

“We’re in a strong position now and as the economy grows, agencies have more relevance," he said. "Clients are finding it more difficult to find staff and move back to using an agency. That’s happening now in white collar".

And while the regions have been subdued, he’s looking to expand Madison into regional cities such as Palmerston North and Hamilton.

The company is also involved in a cadet scheme with Te Puni Kokiri where it takes unskilled workers on a six month cadetship, provides training, and then hires them out as temp workers.

AWF raised $13.5 million earlier this year, reducing debt to $18.6 million. AWF shares rose 2.2 percent to $2.35 and have fallen 12 percent in the past year.

BusinessDesk.co.nz

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