One of Australia’s biggest recruitment agencies has been severely hit by a sharp earnings downgrade, triggering fears of a white-collar jobs slump off the bat of delayed hiring decisions and redundancies.
Talent2 announced yesterday that its underlying earnings for the six months to December (earnings before interest, tax and depreciation) were likely to be in the range of $5m-$6m – a sharp decline from the $13m it made in the first half of 2011.
The announcement triggered a 56% plunge in its share price, and management said in a statement: “The global and regional uncertainty created by fears of European contagion and the volatility of financial markets has led to a measurable deferral of decision-making on several new human resources outsourcing contracts.”
The agency said global economic volatility has hit hiring levels in the permanent recruitment market.
The earnings downgrade partly came about because the company invested in upfront costs to procure contracts that have not yet materialised, Talent2 CEO John Rawlinson said.
“We know managed services revenue will improve in the second half, but we don't know whether recruitment will because we don't have the backlog of contracts,” Rawlinson added.
The profit warning is consistent with other reports of redundancies and reduced hiring, especially in the financial services and broking sector.
“There will be a lot of job losses across the industry in the new year. It can't keep going like this,” BELL Potter stockbroker Charlie Aitken said in a report.
Westpac senior economist Justin Smirk also weighed in on the speculation, describing the Australian jobs market as “far from robust”.
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