Adcorp blames lower half-year profit on rand strengthening against African peers
Rising rand against African peers erodes actual growth
JSE-LISTED workforce management group Adcorp Holdings yesterday reported a 9.15 percent drop in profit to R85.84 million for the six months to end August as the strengthening of the rand against African currencies dented its results.
Adcorp said rand gains during the period contributed to preventing the company from achieving or surpassing last year’s R94.49m profit.
Chief executive Richard Pike said: “In the absence of these forex gains and losses, comparable normalised earnings per share growth of 6 percent has been achieved, which is a better indication and barometer of actual, organic trading conditions.”
Pike said the decline was largely caused by the currency swings, which cost the company R40m in the current financial year.
Adcorp offers workforce solutions across a vast spectrum of industry sectors and job types with a specific focus on Africa, the Middle-East and the Asia Pacific region.
The company reported a 3 percent increase in revenue to R8.07 billion compared with R7.80bn reported last year.
It said earnings a share and headline earnings a share declined 10 percent and 38 percent to 78.4c and 77.5c respectively.
Environmental shift
Normalised earnings before interest, tax, depreciation and amortisation of R246.8m were 12 percent below the prior year’s R279.9m.
The board declared a dividend of 20c a share.
Earlier this year Pike lamented labour law changes made in South Africa.
“Following a landmark labour court ruling clarifying certain ambiguity in these new laws, stability has largely returned to the South African market which has seen Adcorp recovering much of the lost ground of the prior year,” he said.
Pike said the Australian subsidiaries Paxus and LSA performed exceptionally well and were expected to continue on this positive trajectory.
Over the past year, Adcorp refined its strategy and business model to take advantage of fast changing, industry, market and technology trends.
“Our focus is on becoming far more customer focused, embracing technology and co-designing output based staffing solutions with our clients,” added Pike.
Adcorp shares rose 1.5 percent on the JSE yesterday to close at R15.55.