Jump in AWF sales, earnings points to Christchurch rebound
BUSINESSDESK: Contract labour firm AWF Group posted a jump in first-half sales and earnings and says demand for its services in Christchurch are a leading indicator of a recovery in the stricken city's construction recovery.
Profit in the six months ended September 30 rose to $4.4 million from $1.7 million and sales climbed 29% to $61.9 million, the Auckland-based company says in a statement.
Shares of AWF climbed about 7% to $2.45 on the results and have advanced about 16% this year. The company will pay a first-half dividend of 6.4 cents a share, up from 5 cents a year earlier.
The results tend to be a leading indicator for the economy because companies are more willing to take on temporary staff when trading picks up, before committing to permanent workers.
"The Christchurch rebuild appears to be gaining momentum," chief executive Mike Huddleston says. At the same time, "strong housing price improvements combined with a shortage of housing and low interest rates are beginning to breathe life into the Auckland residential market".
AWF is New Zealand's largest provider of temporary staff, placing 3000 to 4000 people a day into jobs through a network of 34 branches.
Mr Huddleston says while construction is showing signs of revival, the general economy is still weak.
"The broader New Zealand economy remains sluggish and continues to represent a significant challenge. Although the improvements in construction activity are positive developments we are not expecting a sharp uplift in demand for temporary staff in many of the other sectors we service."
AWF continues to seek "value-accretive acquisitions to penetrate deeper into the sectors we already service and to widen the scope of our offering", he says.