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Johannesburg - Recruitment specialists Kelly Group [JSE:KEL] on Tuesday reported diluted headline earnings per share of 28.2 cents for the year ended September 2010 from 61.7 cents previously.
Operating profit of R32.2m was 67% down on the prior year, while net profit after tax and earnings per share for the year also declined by 55% and 54% respectively.
There was, however, 2% revenue growth to R2.050bn from operations controlled by the group.
No dividend was declared "based on the decline in profitability and the need to fund future growth."
Business units that performed above expectations in 2010 included Torque IT, Kelly Industrial as well as M Squared Consulting in the US.
Torque IT managed to grow its revenue by 6% and net profit before tax by 136% "and exceeded expectations in an extremely tough market for skills development companies."
Other skills development initiatives within the group, more specifically the learnership drive, benefitted the group directly as well as indirectly.
During the year the group managed to conclude 1 075 learnerships at an exit rate of 82%, well above the industry average of 38%.
"This enabled the group to access tax allowances in excess of R70m while enhancing the skill set of our associates/staff that in turn benefit customers and the group."
Kelly said this initiative by Government created a sustainable platform for job creation and skills enhancement that was "beneficial to all parties."
A refocus of Kelly Industrial during 2008, that included forced reductions in headcount as well as leadership changes, was now "bearing fruit" as revenue grew by 4.0% and EBIT by 38.9% during the year.
Chief executive Grenville Wilson said the group's focus on diversifying the business through the development of new, high-margin technology products and services should help to lessen its exposure to the staffing market which, he said, was likely to remain depressed for some time to come.
"The employment industry tends to lag broader economic trends and the fact that the economy is growing without creating jobs means that trading conditions will remain tough for the foreseeable future."
Wilson said, however, that the Group had been quick to respond to the global economic downturn by shifting its focus from being just another staffing company to one that added value to every link of the human capital management chain: assisting our clients in optimising their workforces; developing the systems and processes to improve productivity levels; and keeping payroll and administration costs down.
"While these new products and services are still in their infancy and have not yet started contributing to the group's bottom line, they are pure margin businesses that will not only help during this difficult period but will also place the group in a strong position when trading conditions improve," he added.
