Workforce looks abroad for growth

• Group holds off on paying a dividend in prevailing economic climate

Employment and staffing services group Workforce is looking for growth opportunities overseas after a slowdown in permanent opportunities in SA.

Employment and staffing services group Workforce is looking for growth opportunities overseas after experiencing a slowdown in permanent opportunities in SA.

The group operates predominantly in SA, boasting an extensive national branch infrastructure that extends to all provinces in the country.

It has recently expanded its operations in Mozambique, Namibia, Botswana, Mauritius, Scotland and Chile.

On Thursday, the company reported a 21.6% increase in annual profit as its diversified business model proved successful outside SA.

The group also reported revenue of R4.5bn in the year ended December — its highest in its history due to a strong performance by its staffing and outsourcing division, which contributed 61% to group earnings before interest, taxes, depreciation and amortisation (ebitda).

Workforce provides staffing, outsourcing and training services, and its investment clusters include staffing and outsourcing, training and education, healthcare and financial services. Established in 1972, it now operates in 10 countries outside SA.

Net income for the 12 months to end-December rose to R105.7m from R86.9m, while headline earnings per share, which excludes exceptional and one-off items, rose to 46.8c from 38.7c. EPS came in at 46.7cm compared with 39c.

The company opted not to pay a dividend, saying the cash was needed in the prevailing economic conditions and for possible acquisitions.

“In many cases, our services and offerings are desperately needed. We regard this as a true competitive advantage when we enter new markets,” CEO Ronny Katz said. “With careful global expansion, we are experiencing [a] great demand for our services and products, and our knowledge and expertise are highly sought after.”

He said the diversified business model was proving to be successful in markets outside the country.

“The business has changed and positioned itself to cater to various sectors, industries, skills and services. With careful global expansion, we are experiencing great demand for our services and products, and our knowledge and expertise are highly sought after,” Katz said.

“Global expansion sets a foundation for a rand hedge but given the size of the investment cluster reach in SA, the current quantum of foreign earnings is small although it does have the potential to grow.”

Workforce said it expected further improvement in 2023 even though some business, including recruitment for permanent jobs, expected to be somewhat weaker in the current economic downturn.

“Our expansion outside SA will also help the group balance the dire economic growth rate in SA,” the company said, though it also hopes to cash in on the rebuilding of SA’s degrading infrastructure.

“We are experiencing greater demand in industries involved in this repair and development,” it said.

“Less than optimal” debtor management contributed to cash outflow increasing from R29.3m to R65.3m, while cash and cash equivalents decreased 13.8% to R68m.

“Our biggest priority is to claw back the debtors in the coming financial year through increased monitoring and discipline and better use of technology and monitoring,” the company said.

Staffing and outsourcing is the company’s largest segment by revenue, generating close to four-fifths, followed by healthcare, and training and education.

“External developments are starting to bear fruit and we are confident that they will be contributors in the coming financial year,” Katz said. “We intend to build on the momentum as strongly as we can.”

IN MANY CASES, OUR SERVICES ARE DESPERATELY NEEDED. THIS IS A TRUE COMPETITIVE ADVANTAGE WHEN WE ENTER MARKETS