AWF Madison bounces back from 2016 dip with 13% gain in annual profit

AWF Madison Group, the country's biggest contract labour firm, has recovered from last year's dip in earnings with a 13 percent increase in annual profit in an increasingly tight labour market.

Net profit rose to $5.9 million, or 18 cents per share, in the 12 months ended March 31, from $5.2 million, or 16 cents, a year earlier, the Auckland-based company said in a statement. Revenue climbed 20 percent to $256.4 million, roughly the same pace of increase in employment costs to $229.2 million.

AWF had set "modest goals" for the year after restructuring costs a year earlier led to a fall in 2016 earnings. First-half profit rose at a 15 percent pace and the contract firm had signalled it expected the tight labour market to drive double-digit annual growth.

The lift in profit came after "of a year of consolidation of new leadership, continued investment in new technology and dealing with residual matters referred to in last year's reports," chairman Ross Keenan said. "Whilst strong performance was delivered in most areas, the significant lift in outstanding debtor balance at year end put increased pressure on the organisation and accordingly, a further lift in bad debt provisions has been deemed appropriate."

The company booked a $443,000 impairment charge, saying it wrote off the cost of replacing legacy technology in full in the current year, and has completed the first phase of moving to an integrated CRM (customer relationship management) and payroll software. It expects that will reduce costs by removing duplication.

New Zealand's unemployment rate fell to 4.9 percent in the March quarter and the participation rate was at a record 70.6 percent as firms continue to create enough jobs to cater to a swelling population, even as some sectors such as construction find it increasingly hard to find staff.

AWF chief executive Simon Bennett said he was "very satisfied" with where the company was positioned and its plan to capitalise on "significant opportunities" in the coming year.

The board declared a final dividend of 8.2 cents per share, fully imputed, payable on July 4 to shareholders on the register as at June 27, taking the annual payment to 16.2 cents, up from 15.2 cents a year earlier.

The shares last traded at $2.93 and have gained 13 percent so far this year.

Separately, AWF said Janine Mountford, who was to have taken over as chief financial officer next month, has resigned, and it is now looking for a new replacement CFO.

(BusinessDesk)