AWF says core annual earnings to decline, Madison acquisition shows growth

AWF Group Limited Chief executive Mike Huddleston
AWF Group Limited 12-month price history (NZX.com)

AWF Group [NZX: AWF], the contract labour firm, warns blue-collar annual earnings will come in below last year's record, despite a strong contribution from its new white-collar recruitment acquisition, Madison Group.

The Auckland-based company anticipates lower earnings from its core business in the 12 months ending March 31 than a year earlier, without being specific, as its core blue-collar business struggles to match labour supply with demand, it said in a statement. AWF made a net profit of $6.9 million in 2013, including the sale of its Panacea Healthcare unit. Excluding the gain on the sale, it reported underlying earnings of $5.4 million on sales of $130.5 million.

"As signalled in November, the productivity of the core AWF business has continued to fall short of last year's record performance, and will lead to that part of the group delivering an overall result lower than last year," AWF Group Limited Chief executive Mike Huddleston said. "This will be somewhat offset by the excellent Madison contribution."

AWF shareholders approved the $36 million Madison acquisition in November, which is forecast to lift underlying earnings to $8 million and sales to $200 million in 2015.

Huddleston said Madison has delivered against forecasts in the five months since joining the AWF group, and the company will update targets for the 2014/15 financial year when it reports the annual result on May 28.

The shares were unchanged at $2.80, and have slipped 3.5 percent this year.

(BusinessDesk)

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