Solid year as AWF Madison braces for Covid impact

New Zealand's biggest recruitment company today posted a 33 per cent jump in net profit. Photo / File

Labour hire firm AWF Madison won't pay a final dividend this year, citing the economic uncertainty created by the Covid-19 crisis.

New Zealand's biggest recruitment company today posted a 33 per cent jump in net profit from $2 million to $2.7m for the 12 months to March 31.

This was despite a reduction in group revenue to $264m, a 1.6 per cent decrease.

However, the board said it would be prudent and not pay a final dividend this year, having paid 8.2 cents per share last July. It paid an 8 cent interim dividend in November.

AWF shares rose 4.3 per cent to $1.45, trimming their loss so far this year to 23 per cent.

The company posted an increase in earnings before interest, tax, depreciation and amortisation to $12.4m from $7.6m last year. The figure is just slightly below its October guidance of $12.7m to $14m, and included a 10-month contribution from its new executive search division, JacksonStone & Partners.

Picking winners

Increased margins were achieved by being more selective about its construction, manufacturing and logistics clients, and filling more permanent roles, which make the company more money than temporary positions.

The company acknowledged, however, there would be a return to more temporary roles in the current economic downturn.

"Activity levels early in the new financial year, as we await the return to level 1, point to a satisfactory first half of 2021 group result," chief executive Simon Bennett said.

"We remain cautiously optimistic. Cautious, because the full economic impact of the pandemic is yet to be seen; and optimistic, because we know how relevant and well-positioned we are."

Bennett said, however, he was eager to move to level 1 and was sceptical of claims that white-collar workers could be just as productive working from home.

Productivity lacking

"People are underestimating the lack of productivity at level 2. Construction is difficult with distancing, some our clients would not even have two people in a car which is inefficient," added Bennett. AWF's blue collar unit makes up almost 40 per cent of the company's revenue.

The company said it has sufficient operating cash flows for its immediate requirements, including a $12m undrawn overdraft facility.

AWF Madison's white-collar units - Madison, Absolute IT and JacksonStone & Partners – reported revenue of $166.1m, up from $151.9m a year earlier. JacksonStone contributed $27m.

The company retained 90 per cent of its staff over the lockdown, with Madison Recruitment which taking $6.1m to support 904 staff, and AWF taking $15.6m for 2,395 staff.

AWF has shifted its annual meeting from the end of July to September 30.