Why the market punished Adcorp
The recruitment firm’s shares tumble as much as 19% — the biggest intraday fall since January 2009
Shares in Adcorp Holdings crashed as much as 19% on Monday, the biggest intraday fall since January 2009, as the market digested a catalogue of woe from its Friday profit warning. Closing 17.3% down at R11, Adcorp is now trading at its weakest since December 2003, with a market capitalisation of just R1.2bn. At its peak, the share hit R45 in November 2007. The recruitment firm expects a headline loss of between 23c and 33c per share for the year to February, partly after labour-law changes in SA derailed demand for outsourced staff. But Adcorp also experienced trading losses in its African operations because of cutbacks in projects related to oil and gas. Similar cutbacks hit Australian subsidiary Dare, a recruitment and contractor management firm that specialises in the oil, gas and resources sectors and which Adcorp bought for A$30m ($22.25m) in 2015. It has now taken an A$8m impairment against the asset. CEO Richard Pike said on Monday that while there had been some recovery in t...