Staffline warns on profits as Brexit impacts margins
By Iain Gilbert
Date: Friday 17 May 2019
(Sharecast News) - Recruitment and training company Staffline warned on profits on Friday, pinning much of the blame on Brexit.
Staffline claimed ongoing Brexit-related uncertainty had led employers to move a significant number of temporary workers into permanent positions in order to protect themselves against any risk of the labour market tightening, resulting in an overall margin dilution.
While the AIM-listed company said these types of reactions to uncertainty tended to reverse over time, it expects this continue to impact temporary worker demand throughout the current year.
Elsewhere, Staffline revealed it had seen further challenges in its higher margin automotive sector and associated supply chain, where reductions in demand were \"greater than expected\", and had also been hit by a slowdown in new contract momentum, which it largely attributed to the impact of the delayed publication of its 2018 results.
Despite the headwinds, Staffline said its recruitment division was beginning to see \"the definitive benefits\" of its approach to worker engagement and digitally enabled candidate attraction, with management now expecting its strategy to result in \"increasing differentiation\" and to support future growth.
The company, which typically makes around 15% of its earnings in the first quarter of the financial year, said its April performance was a \"key initial indicator\" as to its full-year turn out, and with visibility of that trading, it now expects to deliver adjusted earnings before interest and tax in the range of £23m to £28m for 2019.
At 0830 BST, Staffline shares were down 42.42% to 482.50p.
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