Adcorp Group has initiatives under way to optimise cost structures, diversify revenue streams and enhance efficiency, boosting an already strong performance that saw earnings a share from continuing operations surge 34.4% to 33.1 cents in the six months to August 31.
“By leveraging innovative solutions and data analytics, the group aims to bolster profit margins by identifying growth opportunities and implementing cost-saving measures,” CEO John Wentzel said at the release of the workforce solutions company’s results yesterday.
An interim dividend of 16.1c a share (12.2c) was declared. The results reflected robust revenue growth and operational resilience in South Africa and Australia, despite tough macroeconomic conditions and external challenges faced by both economies.
Wentzel said the group was resilient and on a drive to adapt and grow.
“We will continue with our comprehensive approach to cost containment and effective working capital management to ensure the group’s ongoing stability and profitability.”
The group was experiencing margin pressure across all sectors, primarily due to a decline in permanent placements and subdued demand for higher-margin services.
Revenue grew 10.2% to R6.5 billion driven by the positive strides of the Contingent Staffing divisions in both regions. Gross profit increased 0.2% to R628 million, reflecting resilience even as the gross profit margin declined. Operating expenses grew by only 2.8%, beneath the inflation rates of the group’s operational regions.
Contingent Staffing reported revenue and gross profit growth, with a renewed focus on the mining, renewable energy, and hospitality sectors.
In South Africa this was despite the negative impact of load shedding which dampened revenue growth.
Outsourcing faced challenges due to macroeconomic conditions in South Africa, with delayed contract start-ups. However, new contracts were expected to commence in the second half and the division had entered new higher-margin sectors.
Professional Services saw revenue growth but there were margin pressures due to decreased demand for permanent placements and RPO solutions.
“This downturn is temporary, as a recovery is anticipated when the economy recovers,” the group said.
IT brand Paracon remained solid, while Quest excelled in its domains. Post the voluntary administration of the non-core aaX brand in December 2022, Australia pivoted to emphasise core brands Paxus and LSA. LSA reported significant revenue growth from the prior period, and Paxus demonstrated resilience amidst a decline in permanent placements.
BUSINESS REPORT