The country's recruitment sector is still going through a tough time, and demand is unlikely to pick up sharply in the next six months, says JSE-listed ICT recruitment firm Paracon.
The company yesterday released its results for the six months to March. It reported revenue up 22%, to R589.3 million, and net income up 23%, to R32.8 million.
CEO Mark Jurgens says times are still tough and trading conditions remain difficult. He expects the second half of the year to be about the same as the first six months and doesn't anticipate the market picking up “dramatically”.
“The market remains difficult and unpredictable,” he says. “We do not expect to see an uptick in the job market in the remainder of financial year 2011. However, we will continue to sustain and are well positioned to take immediate and effective advantage once conditions turn for the better.”
Paracon expects the move towards the use of contractors to increase as companies keep an eye on costs, says Jurgens. Demand for ICT contractors is stable, despite the challenging market, he says. “The ICT industry is dependent on contractors.”
Growth opportunities
In the short-term, Paracon will continue to focus on the SAP space, as well as on project management. Last year, the company increased its holding of Mondial to 100% and said it was seeking acquisitions to grow market share.
“AAPM performed excellently,” notes Jurgens. He says project management is key to businesses in any economic cycle and is a strategic focus for growth in the group.
Jurgens cautions that, despite the company's performance in the first half of the year, difficult trading conditions are expected to continue. “Resourcing took a knock with the cost-cutting exercise at a large financial services client and there is still a marked decrease in permanent placements, a high margin revenue stream.”
Permanent placements didn't fare as well as contracting and Personnel Concept had a tough time. Jurgens anticipates a better second half. Earnings before interest, tax, depreciation and amortisation were flat, because of less permanent placements, which are at higher margins.
Group profit was boosted by R4.6 million from India-based associate Nihilent Technologies, up 178% from R1.7 million a year ago. Jurgens says Nihilent, in which Paracon has a 35% share, has promising prospects with a strong project pipeline.
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