AWF Madison sets modest goals for 2017

AWF Madison Group [NZX: AWF], the country's largest contract labour firm, is looking to bounce back from last year's dip in earnings as it sets "modest goals" for 2017, with a view to reaping greater productivity by investing in new technology.

Chairman Ross Keenan told shareholders at the company's annual meeting in Auckland that the 2016 year was one of "transition," including the appointment of a new chief executive, and that the current year was one with "modest goals" after the "pain incurred" last year.

There is "much opportunity ahead but requires greater use of technology with systems and processes, while demonstrating efficiency in a client-friendly manner," Mr Keenan said. "We are investing heavily in our capability in this area but, as with bold goals, time to implement and refine is needed."

AWF Madison is recovering from a drop in profit in 2016 when it faced $1.3 million of restructuring costs related to winding down its Craig Henwood joint venture in Christchurch, even as revenue rose 9%.

One of the goals for 2017 is a target to lift earnings before interest and tax 10% at AWF Madison's blue-collar contracting division from a "mix of lower costs, higher average price realisation, new revenue streams and stronger volumes," say slides accompanying chief executive Simon Bennett's presentation to shareholders at the meeting.

On the white-collar recruitment side of the business, AWF Madison expects a strong performance in Wellington and Christchurch, South Auckland and information technology and while temp and contract roles should stay in demand, permanent recruitment will be more challenging. The Madison division is expected to keep operating margins at 21.5%.

"Shortages of candidates will reward higher margin over time across both businesses," the company said. "A pathway to growth in earnings has been established."

The shares last traded at $2.30, unchanged since the start of the year.


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