IT recruitment company Paracon has hit the R1 billion revenue mark for the first time, during the year to September.
The company says conditions in the recruitment sector have been difficult, as clients hold off on making permanent placements. However, CEO Mark Jurgens says, while the outlook is murky, there are exciting opportunities ahead.
Paracon reported revenue up 10% to just more than R1 billion - a milestone in the group's history. However, margin pressure from clients seeking cheaper rates weighed on operating profit and the company's earnings before interest, tax, depreciation and amortisation were 3% down, to R71.9 million.
The company controlled costs and net profit earnings improved to R57.8 million, which translated into a small per share increase over 2009 to 17.2c.
Jurgens says permanent placements were the most affected by the slowdown in the industry, and he expects another tough year ahead for the Personnel Concept unit. However, the company's contracting unit remained strong.
“Visibility is muddied by inconsistent trends in the wake of the tentative emergence from the recession. We expect that the job market will not pick up significantly in the 2011 financial year.” However, Jurgens points out that this offers Paracon further opportunity to exploit its consulting services.
Growing resources
Paracon aims to bolster its SAP and project management offerings. In the SAP space, it increased its holding of Mondial to 100% and is looking to make acquisitions to grow market share.
Paracon expects AAPM turnover between R50 million to R60 million next year. “Project management is a core skill without which business cannot grow in any economic climate,” says Jurgens.
Paracon's 35% share in Indian-based Nihilent also bolstered earnings, as its share of profit from the off-shoring company amounted to R6.3 million, up from R2 million a year ago.
Standard Bank's pending retrenchment of about 1 000 workers will weigh on Paracon next year, Jurgens says.
However, he adds that this opens up a window of opportunity as Paracon seeks to place some of the IT skills that are entering the job market. “From a bit of doom and gloom in the market, there should be a lot of opportunities in the new year.”
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