Friday 28 October 2016 09:58 AM
AWF Madison lifts 1H profit, expects further growth in tight labour market
By Sophie Boot
Oct. 28 (BusinessDesk) - AWF Madison Group, the country's largest contract labour company, lifted first-half profit 15 percent, which it said reflected improved productivity that has continued into the second half.
Net profit rose to $3.9 million in the six months ended Sept. 30, from $3.4 million a year earlier, while revenue rose 13 percent to $119.3 million, the company said in a statement.
AWF is recovering from a drop in profit in 2016 when it faced $1.3 million of restructuring costs related to winding down its Craig Henwood joint venture in Christchurch. Today, it said operating costs had grown just 5 percent in the period, reflecting tight management control and improved productivity, and said "signs of improved yields were evident and continuing" at the end of the first half.
“AWF has had a strong start to the year, growing both revenue and earnings," chief executive Simon Bennett said. "The tight labour market is resulting in strong demand in the city centres and we expect this to continue. We are capitalising on this increased demand and we are starting to achieve margin growth. Madison contributed modest revenue growth and is positioned well in the market to continue to deliver good results."
The board declared an 8 cents per share dividend, with a Nov. 28 record date, payable on Dec. 5.
"Whilst this is at the lower end of the range indicated for dividends (in relation to underlying earnings), in view of the likely purchase of the Absolute IT Group, a conservative approach is deemed appropriate," AWF said. "Forward cash projections are strong after factoring in the purchase of Absolute IT Group, and are expected to enable the board to consider further debt reduction over time."
The company announced it had bought IT recruitment group Absolute IT for $15.3 million earlier this month, with the deal expected to settle on Nov. 1. Absolute IT posted revenue of about $65 million in the year to March 2016.
The shares last traded at $2.35, and have advanced 2.2 percent this year.