Increased power cuts, deteriorating infrastructure, high inflation and elevated interest rates “have soured the business mood, with clients hesitant to expand operations in the current economic climate”, according to human resources specialist Adcorp.
The company, valued at about R516m on the JSE, on Monday added in its results for the six months to end-August that “GDP growth is expected to be marginal, continuing to impede job creation” and expect these factors will “lead to lower demand, negatively impacting performance”.
The firm, which provides labour broking, training and specialised staffing services in SA and Australia, said things were looking up Down Under despite increased living costs and interest-rate hikes with the labour market moderating, but “sectoral demand variations provide a cushion while inflation continues declining”.
Revenue grew 10.2% to R6.5bn, but operating profit decreased 14% to R59.5m.
Headline earnings per share (HEPS), a common profit measure in SA that excludes certain items, for continuing operations jumped 34.6% to 33.1c and profit 31.6% to R35.3m, while shareholders were rewarded with a 32% hike of the interim dividend to 16.1c.
The bulk of operating profit is generated in SA, at 63.4%.
“In the face of macroeconomic challenges, Adcorp Group has not only demonstrated resilience but also a relentless drive to adapt and grow,” CEO John Wentzel said.
“We will continue with our comprehensive approach to cost containment and effective working capital management in order to ensure the group’s ongoing stability and profitability,” he added.
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