Dialogue profit takes a knock

By Nicola Mawson, Contributing journalist

Johannesburg, 03 Sept 2009

Revenue in the first half of the year to June dropped 10%, compared with last year, as profit was hammered into negative territory, says Dialogue Group Holdings.

The company says “trading conditions remained challenging in the first half of the year as a result of a slowdown in the global economy”. However, management has taken corrective action and has retrenched a number of staff members. It also moved its head office.

Chairman Peter Watt says the company has cut 65 jobs from Dialogue SA and CallForce. These two subsidiaries have been hard hit by the slowdown in activity in the financial sector.

Dialogue hopes to reap R26 million a year from cost-cutting initiatives, which will only start paying off in the second half of the year, and expects its mainstay business, Dialogue SA, to return to profitability next year.

“Everything we are doing is geared towards making the company a worthwhile investment, and making a profit is a part of that,” says Watt.

The company reported a loss of R14 million, compared to a profit of R6 million a year ago as revenue came down 10%, to R178.5 million, as a result of the financial crisis.

However, the revenue that did come in was at higher margins, which has resulted in margins improving to 51%, from 48%. Operating costs in the first half were 11% lower than the R94.3 million recorded in the second half of 2008.

Cost-cutting

The group comprises five businesses: the three call centre operations, which are Dialogue SA, Sibize and Interaction; business continuity and disaster recovery operation ContinuitySA; and CallForce, a specialist recruitment company for the call centre industry.

CallForce and Dialogue SA were hardest hit by the economic slowdown. The recruitment company has aggressively reduced costs due to its dependence on the slowing financial sector, which will result in operating cost savings of R9 million a year.

At Dialogue SA, the company has restructured management and looked into costs. A cost reduction programme cost R2.9 million, but will save the company R16 million a year. Dialogue SA is expected to return to profitability next year.

Interaction, Sibize and ContinuitySA performed satisfactorily. During the half year, ContinuitySA invested into Mauritius to expand its base of operations in the African region.

The head office has also been relocated, at a cost of R1.2 million, but this will save the company R1 million a year.