Staffline lost over half its value on the market today and was on track for its worst day ever as it said Brexit uncertainty was causing companies to offer full-time roles to temporary workers, cutting out the need for the agency.
Shares fell 52 per cent to 397p as the company warned that earnings before interest and tax (Ebit) would reach between £23m and £28m in the 2019 financial year. Analysts had forecast an Ebit of £42.7m.
Companies have responded to the uncertainty over EU workers’ rights to stay in the UK after Brexit, and general Brexit-related worries, by offering many full-time roles.
This has hit Staffline’s business, including its drivers, a high-margin business area for the group.
This, Staffline said, has lowered overall margins, as have challenges in the automotive sector and associated supply chains where demand has reduced faster than expected.
The firm also said it has seen a slowdown in clients signing new contracts, blaming delayed results.
Staffline was forced to delay publication of its 2018 annual results over a minimum wage dispute.
The company said its management is “assessing the significant amount of historic data and transactions, which will then be subject to audit” before publishing its annual report.
“The first quarter is typically a quiet period and normally comprises circa 15 per cent of the expected profit for the year. However, the first quarter was even weaker than normal across both divisions. And trading in April confirmed that Staffline was unlikely to deliver year end estimates,” analysts at Liberum said in a note this morning while slashing their outlook for the company.
“There is still a range of possible outcome given that it is early in the year, and the important trading periods of the summer and Christmas still lie ahead of Staffline.”