The rebound in the economy and the burst of job creation in recent months seems to have bypassed the one listed company that was designed to ride it.
As a result, labour hire and workforce services provider, Skilled Group is losing its CEO after another earnings downgrade yesterday.
The company said CEO and majority shareholder Greg Hargrave will step down following a review of the business.
Skilled said the drop in earnings is due to recent problems in non-staffing services business units and a weaker than expected recovery across the staffing services businesses.
The poor result came despite the sharp improvement in economy and the labour market.
Over 200,000 jobs have been created since late 2009 and judging by the comments from Skilled, it has been unable to take advantage of this new demand from employers.
The end result though will be another year with earnings lower than the year before.
Net profit after tax is likely to be around $10 million to $14 million, half (at best) what was reported for the 2009 financial year, which in turn was down more than 28% from the 2008 figure, which marked the peak of the resources boom.
The company said it is likely to report earnings before interest, taxes, depreciation, and amortisation of about $60 million to $65 million for the year ended June 30, 2010, which is below the median analyst forecast of $71 million.
The company said underlying EBITDA, after adjusting for restructuring costs, is expected to be about $4 million higher than reported EBITDA.
With net profit in the range of $10 million to $14 million, underlying net profit is expected to be around $17 million to $21 million.
Skilled’s net profit for the year ended June 30, 2009 was $28.25 million, 28.2% down on the previous year.
That’s almost 50% below the 52 week peak late last year of $2.40.
"While Skilled Group’s performance in late 2009 indicated signs of improvement and recovery from the global financial crisis, it has now become apparent that overall earnings will be below market expectations for the 2010 year," the company said in yesterday’s statement.
"(This is) primarily because of recent problems in the Group’s non-staffing services business units and a weaker than expected recovery across the staffing services businesses."
In particular, the company’s offshore Marine Services, ATIVO, Excelior and Origin Healthcare businesses had substantially underperformed.
As a result of the recent unsatisfactory performance and the consequent negative impact on the group’s financial position, the board was implementing a strategic review of Skilled Group’s business portfolio, performance and prospects.
The company said it had appointed Goldman Sachs JBWere to conduct the review, which is expected to take some months to complete.
Mr Hargrave, who owns around 30% of the company, said he would lead the review in conjunction with JBWere and then to step aside from his leadership role as the company implements any recommendations.
"Skilled Group’s recent performance has been unexpected and more importantly unacceptable," Mr Hargrave said in a statement.
"I take responsibility for this performance and want to ensure that all options available to the company are canvassed fully, with the interests of all shareholders paramount.
"I intend to ensure that the review leads to outcomes that restore value for Skilled Group’s shareholders."
So what did the news do to the Skilled share price?
The shares fell to a day’s low of $1.23, before rising to end unchanged at $1.36.
The market either thinks the change won’t have any impact on Skilled’s future; or it has already factored the departure into the share price.
