AWF Madison Group shares fell 3.7 percent after the labour-hire firm said the collapse of three building companies dented its earnings.
The company has taken an $800,000 provision after two customers failed in Christchurch and another fell over in Auckland. That resulted in a “significant” drop in earnings for its blue-collar unit as AWF’s migrant workers had to be redeployed, creating a mismatch of workers needed and those available. It cost the firm about $1 million.
AWF said first-half profit was $1 million to $1.5 million lower than the $3.4 million reported a year earlier. That implies profit was $1.9 million to $2.4 million in the six months ended Sept. 30.
The company released the statement after the close of trading yesterday, and the stock fell 7 cents to $1.82 at today’s open. About 12,000 shares have changed hands, compared to the stock’s 90-day average of 14,400.
AWF faced weaker construction recruiting in the March 2018 year, with consenting delays and negative headlines over Filipino migrants sapping demand for its services.
Despite the downturn in the blue-collar arm of the business, AWF Madison’s white collar division registered first-half earnings growth and said total turnover was in line with the $143 million reported a year earlier. It also reported strong cash-flow and repaid $3 million of debt, leaving it with $5.7 million in the bank.
That position also let AWF Madison make an opportunistic acquisition, buying Dunedin recruitment firm Select for an undisclosed sum.