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Empresaria Group plc: THE INVESTMENT CASE

Empresaria Group confirms strong performance in 2017

Underlying profits are up 20% year-on-year and net fee income should be around 17% higher
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INVESTMENT OVERVIEW: EMR The Big Picture
Big in Japan in 2017

International specialist staffing group Empresaria Group plc (LON:EMR) notched up a record year in 2017.

Underlying profits are up 20% year-on-year. Net fee income should be around 17% higher with adjusted earnings per share 9% higher.

READ: Empresaria takes corrective action in Germany and the Middle East

UK professional and other services (domestic services and new house sales) went well as did information technology and design in Japan and retail in Chile.

On the downside, the technical and industrial sector experienced a tough year, while the group made every effort to minimise the impact of changes to temporary worker legislation in Germany.

READ: Multi-brand, global strategy helping drive record growth for staffing firm Empresaria

"Empresaria has demonstrated the benefit of its diversified business model, delivering another record profit in 2017,” said Joost Kreulen, chief executive. 

“We are focused on delivering our strategy: strengthening a multi-branded group, with a focus on developing leading brands that are diversified and balanced by geography and sector," he added.

Allenby Capital noted that although the 2017 performance was expected to be in line with expectations, those expectations were modestly reduced following a trading update in November.

Think globally, act locally …

Founded in 1996, and listed on AIM since 2004, the company has a seemingly paradoxical philosophy, being both heavy on specialisation and averse to putting all of its eggs in one basket.

It achieves this through a multi-brand approach; each brand is a semi-autonomous unit specialising in its chosen fields, but there are enough brands under the Empresaria umbrella to ensure the group has a decent geographical and sectoral spread.

READ: Latest Capital Network research...

The group operates 20 brands in 19 countries across seven separate sectors: Technical & Industrial; IT, digital & design; professional services; retail; executive search; healthcare; and other services.

Each brand seeks to be a leader in its field, tailoring the brand to the specific needs and requirements of the clients and the candidates.

"It's more like an inch wide and a mile deep, than a mile wide and an inch deep," Kreulen has said, explaining the company's philosophy.

The bulk of the company's net fee income (NFI) comes from providing temporary staff, with the split increasing to 60% temps and 40% permanent staff in 2016.

Geographical spread ….

More than half of the group's brands operate in more than one country, and geographically the group's operations divide into four areas: the UK; continental Europe; Asia Pacific; and the Americas.

On the European mainland, it is represented in Germany, Austria and Finland, with the focus very much on Germany.

The German staffing market was only deregulated in 2004, which means temporary staffing is still a relatively emerging sector within the German economy.

In the Americas, the group has long been represented in Mexico and Chile.

The big earners are Technical & Industrial; IT, Digital & Design; and Professional Services.

The acquisition of Pharmaceutical Strategies in the US saw it establish a presence in the Healthcare niche, while a swoop for New Zealand-based Rishworth Aviation in July gave it the chance to build its Aviation Services interests.

In a people business, keep the people …

Empresaria is not alone in pursuing a buy-and-build strategy, but it seems to have worked out that when buying a people business, it is wise to keep the people.

Management believes in giving the brands a lot of independence, and encouraging staff to hold a stake in the group, in the hope this will keep the entrepreneurial flame alive in any companies it acquires and will engage the loyalty of the group's own talent pool.

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Empresaria Group plc Timeline

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