Small cap recruiter Empresaria (EMR:AIM) looks set to smash profit forecasts this year after delivering 36% growth in earnings per share (EPS) in the last six months.
Performance is being driven by strength in UK and Asian jobs markets, chief executive Joost Kreulen says, as well as office openings in key markets.
‘There is a talent shortage generally in the market, so that’s helping to drive strong growth in permanent recruitment revenues,’ says Kreulen.
‘Our recent office openings have all been focused on permanent recruitment and that is contributing to our performance as well.’
Empresaria stock trades 9.7% higher today at 79p but continues to trade at a wide price-to-earnings discount to its support services sector peer group (see graph).
‘It’s almost starting to sound a little bit boring but this is another robust performance and we continue to deliver against our strategy,’ says chief executive Joost Kreulen
‘We’re confident about the outcome for 2015 and also 2016 given our current view of end-markets.’
Analysts at Shore Capital penciled in growth of just 7.3% for the full year, for an adjusted EPS estimate of 8.8p.
But EPS in the six months to 30 June 2015 hit 3.4p , up from 2.5p a year earlier.
Key management targets outlined at the start of this year included 10% net fee income growth, a 20% conversion ratio and a reduction of net debt.
Net fee income, a key measure of growth at recruiters, gained 16% at constant currencies to £24.1 million . Weakness in the euro shaved around four percentage points off NFI growth.
Conversion ratio - the percentage of net fee income which drops through to operating profit - was 12.4%, up from 10.9% a year earlier.
Debt as a percentage of Empresaria’s debtor book – money owed to it by customers – was 31% against an end-year target of 25%.
Cash conversion should improve in the second half, according to chief financial officer Spencer Wreford, reducing net debt further.