Empresaria swings to first-half operating loss

Specialist staffing firm Empresaria swung to an operating loss in its first half, it reported on Tuesday, reflecting the continued impact of difficult market conditions on its financial performance.

The AIM-traded firm reported a 3% decline in revenue to £121.8m, although on a constant currency like-for-like basis, revenue saw a 4% increase.

Net fee income dropped by 15% to £25.3m, with a 9% decrease on a constant currency like-for-like basis.

That decline was driven by a significant reduction in permanent placements, which fell by 21%, and a 1% decrease in temporary and contract placements on a constant currency like-for-like basis.

Offshore services also saw a 10% decline in net fee income.

Empresaria reported an operating loss of £3.6m, swinging from the £0.6m profit recorded in the second half of 2023.

Adjusted operating profit fell by 23% to £1m, with a constant currency like-for-like decrease of 8%.

The group also reported a loss before tax of £4.4m, compared to a loss of £0.2m in the same period last year.

Adjusted diluted losses per share widened to 1.2p, up from 0.8p in the first half of 2023.

Despite the challenges, the group managed to reduce its costs by £2.3m year-on-year on a constant currency like-for-like basis, partially mitigating the impact of declining net fee income.

Adjusted net debt increased to £13.5m, up from £11.1m at the end of December, with available headroom of £10.5m.

Looking ahead, Empresaria said it expected its full-year adjusted results to be broadly in line with current market expectations, although it cautioned that market conditions remained challenging.

“Challenging conditions have continued to impact recruitment demand in the first half of 2024,” said chief executive officer Rhona Driggs.

“Permanent recruitment continues to see the greatest impact while our temporary and contract business remained broadly stable, showing more resilient year-on-year net fee income performance.

“We continue to prioritise our strategic initiatives and have made significant progress in building a more scalable and resilient business while reducing complexity across the group.”

Driggs said the company’s focus remained on positioning the business to capture new growth opportunities, strengthening its sales capabilities, maximising its cross-selling efforts and diversifying its service offering, while maintaining rigorous cost control.

“I am confident in our ability to navigate the current environment effectively and optimistic about our ability to rebound quickly when the market improves.”

At 0954 BST, shares in Empresaria Group were flat at 39p.

Reporting by Josh White for Sharecast.com.