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Brokers lower forecast for CPL

Analysts have rowed back on full-year forecasts for CPL Resources, despite the recruitment firm issuing a relatively strong set of first-half figures yesterday.

CPL’s results — for the six months to the end of December — showed a 5% year-on-year jump in group revenues, to €193.2m and a 5% increase in gross profit to €28.3m. However, operating profit for the period was down by 13% at €5.97m, as were pre-tax profits at just over €6m; on account of the amount the group invested in its facilities and operations during the period.

The group’s interim dividend — at 4.75c per share — remained unchanged from last year.

CPL’s cash balance stood at €24.2m at the end of 2014, and chairman John Hennessy said the business remains well-placed to take advantage of further growth.

“In the six-month period… we have increased, significantly, our investment in the group’s operations,” said Mr Hennessy. “We have done so in order to be well-positioned to take advantage of expected improvements in our key markets.

“Although we still face challenges in several markets and sectors, arising from economic uncertainty and continuing competitive and client pressures, our strong financial position will provide us with the resources to capitalise on growth opportunities as they arise.

“While the pace of recovery remains uncertain in many markets, we expect the remainder of the financial year to show profitable growth on the previous six months for the group.”

However, CPL also said while it is seeing “gradual improvements” in market conditions, significant pricing challenges and headwinds remain “in a number of sectors and locations”.

This has led analysts to be cautious on the group’s full-year prospects, with both Goodbody Stockbrokers and Davy suggesting reductions to their forecasts on the firm.

“Given the sizeable investments being made by CPL and a cautious perspective on the recruitment environment, we will adjust our profit before tax forecasts for the full year down to around €13m, implying second-half profit before tax of around €7m; an increase of around €1m on the first half as the incremental net fees generated drop to the bottom line,” said Ross Harvey at Davy.

CPL said revenue generated from temporary job placements grew by 5% to €182m in the first half of its financial year.

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