Staffline Group PLC (LON:STAF) said full-year underlying operating profit will be marginally ahead of expectations after a strong second half.
The current lockdown has not caused the significant spike in food customer demand first seen in March 2020, but volumes still remain high and look set to continue until COVID restrictions ease across the UK.
READ: Staffline sells apprenticeships business to Babington Business College
Across 2020, the recruitment and training group said it experienced strong demand for temporary recruitment from the food, driving, logistics and e-commerce sectors in 2020, whilst the manufacturing, retail and automotive industries continued to be more challenging.
Despite the national lockdown in November and restrictions in December, the group still experienced a strong Christmas trading peak, with significant demand from food retail customers, while e-commerce and logistics experienced a very strong trading period due to the transition to online shopping.
The firm said it improved its operational, financial and governance processes and board composition which resulted in better revenues, underlying operating profit, working capital and cash generation in the second half of 2020.
As of December 31, net debt was £9mln, down from £59mln in December 2019, thanks to cost-saving measures and the deferred VAT relief of £43mln which can be paid in instalments between March 2021 and March 2022.
Analysts at house broker Liberum increased the target price to 60p from 40p to reflect the evidence of recovery.
“Financial year 2020 Recruitment sales were higher than expected as Lockdown 2 was not so severe,” they commented.
“The improving trading performance and better cash flow increase the options for refinancing. Management’s target margins suggest £11mln to £12mln of underlying earnings (EBIT) is reasonable in financial year 2023, but it could be higher if revenue growth increases.”
Shares rose 4% to 58.9p on Monday at the opening bell.