SINGAPORE (Nov 8): Mainboard-listed recruitment firm HRnetGroup saw its earnings fall 4.9% to $12.0 million for 3Q19 ended September, from $12.6 million a year ago.
On a fully diluted basis, this translates to earnings per share (EPS) of 1.19 cents for 3Q19, compared to EPS of 1.24 cents for 3Q18.
3Q19 revenue edged up by 1.6% to $106.7 million, driven by a 3.8% increase in earnings from flexible staffing matches.
On the other hand, the professional recruitment segment saw a 4.1% decline as several companies saw a hiring freeze.
Gross profit for the quarter was down 3.8% to $38.4 million, as gross profit margin retreated 2.1 percentage points to 35.9% in 3Q19.
As at end-September, cash and cash equivalents stood at $238.7 million.
On a geographical basis, gross profit contribution from Singapore was down 4.2 percentage points to 48.9% in 3Q19 amid slowing economic growth in the city state.
“For the first time, Singapore’s contribution to gross profit has fallen below the 50% mark, which whilst anticipated, came earlier than expected,” says Adeline Sim, executive director of HRnetGroup.
Sim notes that gross profit from its North Asian units have made “strong strides” and now contributes to 47% of gross profit. Growth in this region was spurred by the opening of RecruitFirst Taipei on July 1.
RecruitFirst is a chain under HRnetGroup that focuses on flexible staffing. Including its recent venture into Taipei, the group has five units in North Asia.
“Our focus on penetrating more resilient sectors, coupled with the expansion of our flexible staffing brand RecruitFirst, have helped to offset some pressure from the lacklustre demand in the professional recruitment segment,” Sim says.
She adds that other acquisitions, such as in Hong Kong through its Career Personnel chain and in China through its REForce brand, are bearing fruit.
“We are reaping the benefits of one plus one is greater than two” Sim says, pointing out that the collaboration has allowed the companies to achieve more together.
For now, the company has its sights farther overseas, following its 29.95% acquisition of the Alternative Investment Market (AIM) of Staffline Group in August.
The London Stock Exchange-listed Staffline is a workforce recruitment and training organisation serving both government and commercial customers in the United Kingdom and Ireland.
Sim is now in line to be Staffline’s non-executive director, a move she says will give HRnetGroup “more effective oversight in the operations and performance of the business”. It will also “give us a stronger voice when it comes to policy formulation,” she adds.
Already, the acquisition has given HRnetGroup more visibility, Sim says, including “open[ing] up opportunities for more conversations”.
And while she is still considering her options, she is happy to “strengthen [HRnetGroup’s] network further in Europe or the Americas, or further penetrate the emerging Asian economies to solidify our leadership position in the region”.
Apart from this, Sim says the company has been improving itself through a “multi-pronged approach”.
One such move is “ELLA”, a digital platform that allows candidates to sign their appointment letter and update their personal information. Since its launch on 1 July, Sim says some 250 man-hours have been saved.
On the whole, Sim says she is looking at targeted measures based on the needs of the sector. For instance, in the flexible staffing segment, the company is focusing on “more resilient sectors” in light of the greater demand for such services during the impending festive season.
As for professional recruitment, Sim is looking for “bright spots” she can train people for. So far, the company has identified gaps in the project management, digital and IT needs in the banking sector, which it is now looking to bridge.
Even with all these moves, Sim hopes that key economies will pick up in the next year so that demand for professional services will go up.
In line with her optimism, Sim has been engaging in share buybacks to signal a “high level of confidence in the group and its business”.
As at 1pm, shares in HRnetGroup are trading flat at 60 cents.
