Sturdy staff

Finweek English Edition - - Companies & Markets - LAUREN COLE

34 STAFFING ????? AND OUT­SOURC­ING Kelly Group con­tin­ues to ben­e­fit from hav­ing po­si­tioned it­self to ser­vice those sec­tors of the mar­ket where skills are scarce. Rev­enue growth of 15% to R2,2bn in the 12 months to Septem­ber is re­flec­tive of the re­silience of the South African staffing mar­ket, driven pri­mar­ily by the short­age of skills. Kelly’s strat­egy is to con­tin­u­ally de­velop new prod­ucts and ser­vices, specif­i­cally for the scarce skills mar­ket.

The re­cent ac­qui­si­tion of Torque IT, plus es­tab­lish­ing a new ICT divi­sion, are ex­pected to pro­vide good growth and rev­enue op­por­tu­ni­ties with the pro­jected short­fall of ICT prac­ti­tion­ers es­ti­mated at 70 000 peo­ple, more than 25% of the cur­rent ICT work­force. How­ever, Kelly’s prod­uct of­fer­ing isn’t lim­ited

12 FE­BRU­ARY 2009 to staff place­ments but has di­ver­si­fied to in­clude busi­ness process out­sourc­ing ser­vices and train­ing. Kelly of­fers ex­pert pay­roll, third­party and elec­tronic funds pay­ments so­lu­tions as well as mi­croloan and au­to­mated at­ten­dance sys­tems through its Paxsal and K-Log sub­sidiaries.

The group’s sys­tems and its Kelly brand are highly re­garded in the in­dus­try, thereby sup­port­ing sus­tain­able earn­ings in the cur­rently dif­fi­cult eco­nomic en­vi­ron­ment. Kelly’s op­er­at­ing mar­gin im­proved to 6% in 2008, de­spite slower sec­ond half rev­enue growth. That was largely at­trib­ut­able to en­hanced pro­duc­tiv­ity gains, tech­no­log­i­cal ad­vances and ex­pan­sion into new mar­ket sec­tors.

Kelly had a solid op­er­at­ing per­for­mance in 2008, with cash gen­er­ated from op­er­a­tions up 23% at R158m and net in­come up 64% at R97m. De­spite that sound per­for­mance, SA’s staffing mar­ket was im­pacted by global eco­nomic jit­ters, high in­ter­est and inflation rates with the re­sult that the sec­tor’s share price came un­der fire. Kelly wasn’t ex­cluded, with its av­er­age price fall­ing from 866c in Fe­bru­ary 2008 to its cur­rent 463c/share. This is Kelly Group’s first full set of re­sults since list­ing. A div­i­dend yield of 7,7%, cou­pled with its re­ported sturdy fi­nan­cial per­for­mance, makes Kelly an at­trac­tive in­vest­ment op­tion. It was a win­ner on the re­port­ing front, with Kelly Group’s 2007 an­nual re­port voted the best in the fledg­ling com­pany cat­e­gory by the Char­tered Sec­re­taries of South­ern Africa.

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