Shares in Staffline Group PLC (LON:STAF) plunged after the recruitment and training group issued a profit warning.
The board now expects the group to deliver adjusted earnings before interest and tax (EBIT) in the range of £23mln to £28mln for 2019. Market expectations for the current year are for pre-tax profits of £41.2mln, although obviously they will now be revised.
The group has yet to publish its results for 2018 after concerns were raised over its invoicing and payroll practices.
READ: Staffline soars on AIM restoration as accounting blunder fails to dent performance
The company put the profit warning down to uncertainty over Brexit, saying that a number of companies are placing temporary workers onto the permanent payroll just in case they can’t find sufficient staff members following Britain’s exit from the European Union.
A proportion of these "temp to perm" transfers have occurred in the higher margin driving sector, resulting in an overall margin dilution for Staffline. In addition, the recruiter is finding things tough in the higher margin automotive sector and associated supply chain where reductions in demand have been greater than expected.
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There has also been a slowdown in new contract momentum in the current financial year, which the company largely attributes to the impact of the delay in the publication of the 2018 full-year results.
Shares in Staffline were the second worst performers in London in early trading, down 383p (46%) at 455p.
It’s all gone wrong everywhere ????
@reb40 ????required again...I don’t invest in recruitment companies & if I’d have to choose one it wouldn’t be this one????
— Rhomboid1 (@rhomboid1MF) May 17, 2019