Adcorp’s earnings robust despite strike action


[DATA ADR:Adcorp Holdings LTD.], South Africa’s largest diversified workforce management and business process outsourcing company, said that group revenue increased by 12 per cent to 6.4 billion rand for the period while EBITDA hiked up by 21 per cent to 299.7 million rand.

Normalised earnings per share rose by nine per cent to 191.7 cents while headline earnins per share increased signifacntly by 573 per cent to 150.9 cents.

(READ MORE: Adcorp expects 564 to 582% EPS increase)


An interim gross dividend of 60 cents per share was declared for the period.

“The group’s blue-collar businesses continued to perform well, delivering strong earnings and margin growth despite being affected by strike action which negatively impacted volumes,” said the company in a statement.

Adcorp added that the new Labour Relations Act (LRA) that will be signed into law this year will continue to benefit the group’s blue-collar businesses as employers favour the larger providers such as Adcorp who are able to ensure regulatory and legislative compliance.

“The group’s South African operations are well prepared for the impending changes to labour legislation. Whilst the full practical implications of these legislative changes are yet to unfold, it is unlikely that they will have any meaningful, negative impact on the group’s overall financial performance,” continued the statement.

(READ MORE: Adcorp clients respond to turbulent labour market)

Its white-collar businesses however were slightly down due to its independent contracting division posting low earnings due to seasonality. The group expects a stronger performance in the second half of the year.

The group’s other African operations, mainly focused in areas such as mining, oil and gas continued to show good growth.

In Australia, Paxus, its independent IT contracting business also achieved solid earnings, indicating that the country’s IT sector is improving.

Labour Solutions Australia (LSA), acquired by Adcorp in December 2013, is also integrating well into the group.

In terms of future prospects, Adcorp believes that the consolidation in the South African industry and the tendency of employers to favour large providers like Adcorp will bode well for the group.

“In addition, the group continues to strengthen its presence and to seek out opportunities across Africa and the Asia Pacific region where it is growing its footprint and is developing a reputation as a player of consequence in these markets,” said the company.

(READ MORE: Adcorp aims to improve global portfolio )

“The potential to deliver work assignments across these various geographies is now a reality. In this regard, the group has been successful in pursuing a number of cross border opportunities which, given its relatively recent expanded geographic reach, it is uniquely positioned to service. It is anticipated that many more of these cross border opportunities will be in the offing.”