Cape Town - Recruitment specialist Kelly Group, which took a beating in the six months to end-March, looks anything but hopeful for a short-term recovery in employment growth.
On Monday the group reported a 57% drop in operating profits to R26m for the half-year to end-March 2010. Turnover – mainly generated by temporary staffing services – dribbled down 7% to R1.1bn.
Kelly CEO Grebville Wilson said Kelly's experience that recruitment activity lagged the broader economy was no different in the current financial cycle.
He said two consecutive quarters of growth had not translated into real activity or improved results.
"A detailed analysis of our results for the first half of the financial year yields no clear trend or pattern to suggest the much-anticipated recovery in employment growth."
With reference to the Greek crisis in Europe, Wilson said when economic uncertainty prevailed there was a direct impact on economic decision-making.
The pressure was most apparent on Kelly's trading margins in its core SA-based staffing business, which dipped from 7.3% to just 4.2%.
International operations fared worse, with R200m generated in revenue whittled down to just R438 000 at operating profit level.
However, Wilson noted that some Kelly operations had shown growth. "Our newly-launched productivity management tool K-log has started to generate annuity revenue."
Another positive was that despite the marked fall in profits, Kelly generated R30m in operational cash flow.
Wilson said the quality of the debtors’ book and strong cash collection resulted in Kelly ending the quarter at 31 days’ sales outstanding (DSO) and a total provision for doubtful debts of just R2.4m (1.3% of the total debtors' book).
While Wilson cautioned against expectations of a short-term uptick in the recruitment sector, he stressed Kelly would continue to improve efficiencies, drive down costs and aggressively pursue new business.