Shares in Staffline plunge as recruiter warns on profits

Shares in recruitment firm Staffline have plummeted after the company said Brexit uncertainty was affecting the employment market.

The company said adjusted earnings are now expected to be between £23 million and £28 million for the current financial year.

This compares to analyst estimates which had forecast £42.7 million.

Shares dropped as much as 55.3% in early trading on Friday.

Staffline said ongoing Brexit uncertainty had led to many employers transferring their temporary workforce to permanent employment.

The companies taking the action hope to mitigate the risk of a tightening temporary labour market after the UK leaves the EU, with fears that some overseas workers will leave the country.

The company has also been affected by an internal accounting issue, which delayed the publication of its 2018 financial results.

This has discouraged some clients, resulting in a slowdown in new contract momentum.

In the group’s training division PeoplePlus, slower uptake of apprenticeships will weigh on this year’s performance as employers delay new apprenticeships amid current uncertainty.

Staffline said retailers in particular were holding back while store restructuring programmes are completed.

Analysts at Liberum slashed their expectations for the group’s performance, but said it was still relatively early given that the first quarter is usually quiet.

“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,” they said.