Adcorp has worst slump in 25 years after warning SA employers are cutting back
Drought in Australia also put pressure on the group’s Labour Solutions Australia business, which primarily provides staff for the agricultural sector
The share price of employment services group Adcorp had its worst one-day fall in 25 years on Friday, after the company warned that its profits would take a hit from SA’s weak economy and drought conditions in Australia.
Many clients in SA had responded to the economic climate by cutting back on their workforce or delaying permanent appointments, the group said on Friday. It would result in a fall of up to 94.5% in headline earnings per share (heps) for the six months to end-August.
The statement released shortly before markets closed on Friday resulted in a 22.5% fall in Adcorp’s share price to R15.50, its worst fall since December 17 1993.
Heps was expected to be 5.9c-4.9c for the period, from 88.3% previously, the company said. The company expected a loss per share of 375.5c-450.6c, compared with earnings per share of 90.2c in the prior comparative period.
The company impaired its resourcing-based cash generating units by R450m during the period, it said.
Drought conditions in Australia also put pressure on the group’s Labour Solutions Australia (LSA) business, which primarily provides staff for the agricultural sector.
“The last twelve months have seen record-high daily temperatures followed by unprecedented torrential rain and flooding, resulting in widespread crop failures and livestock losses, hence a decline in demand for the staff provided by LSA,” the statement read.
Adcorp’s results are expected on October 28.