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AWF Madison recovers from earnings dip

NZ Newswire logoNZ Newswire 25/05/2017 Paul McBeth

AWF Madison Group, the country's biggest contract labour firm, has recovered from last year's dip in earnings with a 13 per cent increase in annual profit in an increasingly tight labour market.

Net profit rose to $5.9 million in the 12 months ended March 31, from $5.2m a year earlier, the Auckland-based company said on Friday.

Revenue climbed 20 per cent to $256.4m, roughly the same pace of increase in employment costs to $229.2m.

AWF had set "modest goals" for the year after restructuring costs a year earlier led to a fall in 2016 earnings. First-half profit rose at a 15 per cent pace and the contract firm had signalled it expected the tight labour market to drive double-digit annual growth.

The lift in profit came after of a year of consolidation of new leadership and continued investment in new technology, says chairman Ross Keenan.

"Whilst strong performance was delivered in most areas, the significant lift in outstanding debtor balance at year end put increased pressure on the organisation and accordingly, a further lift in bad debt provisions has been deemed appropriate."

The company booked a $443,000 impairment charge, saying it wrote off the cost of replacing legacy technology and it has completed the first phase of moving to an integrated customer relationship management and payroll software.

New Zealand's unemployment rate fell to 4.9 per cent in the March quarter and the participation rate was at a record 70.6 per cent as firms continue to create enough jobs to cater to a swelling population, even as some sectors such as construction find it increasingly hard to find staff.

AWF chief executive Simon Bennett says he is very satisfied with where the company is positioned and its plan to capitalise on "significant opportunities" in the coming year.

The shares last traded at $2.93 and have gained 13 per cent so far this year.

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