Paracon anticipates growing demand

The market is looking up, as demand for permanent staff has improved in the past two months, says ICT resource provider Paracon.

The company yesterday said turnover had increased marginally by 1% to R926.95 million in the year to September. However, net profit was 20% down to R56.5 million as margins came under pressure, which led to lower headline earnings per share, at 11% down to 17c.

Mireille Levenstein, group FD, says “given the market conditions, our performance was credible”. She explains that turnover was still up, although only slightly, but this was off a high base.

Levenstein says margins have been under pressure, which led to lower profits. This is due to slower demand for permanent contractors, which is where the higher margin business lies. Companies are taking longer to make hiring decisions, she explains.

However, Levenstein says the company is starting to see an improvement in demand, with the last two months being more positive on the permanent side. “We are seeing more requests from clients.”

The company's contractor and client base has also remained stable, and Levenstein believes the fact that the company's fees are not exorbitant has aided it, as Paracon is not seeing much client reluctance to paying its placement fees.

“We've really focused on what we do best.... We've outperformed our competitors in this market, and that shows the resilience of the business,” says Levenstein.

Paracon also plans to buy the 78% of SAP solutions company Mondial it does not already own. The resource provider already owns 22% of Pretoria-based Mondial.

Levenstein says Mondial “fits in beautifully” with Paracon's current business units and offers it the opportunity to cross-sell the SAP skills to its other units, and skills from its other business units to Mondial's clients. She did not disclose the price of the deal.

Paracon is on the lookout for other companies to acquire, as long as they add value, Levenstein adds.

The company already has several subsidiaries, such as Paracon Resourcing, Business Solutions, X-Pert Group and The Personnel Concept.

Paracon says it does not expect to be badly affected by government proposals to further regulate the staff outsourcing industry.

“The exact nature of the impending changes to legislation is still uncertain at this stage. However, it appears the proposals are aimed at further regulating certain sectors of the market to protect vulnerable workers and to promote 'decent work',” the company explains.