Peoplein Limited reports financial results for the half-year ended 31 December 2023

Peoplein Limited (ASX: $PPE) has reported its financial results for the half-year ended 31 December 2023. The company experienced a decline in profit, with normalised EBITDA for H1 FY24 down by 37.69% compared to the same period in the previous year. The revenue for the period increased by 1% to $602.7 million, reflecting the strength of its sales culture. However, the company's profit was significantly impacted by a shift towards lower-margin work and a reduction in permanent recruitment, particularly in the technology sector.

Executive Commentary on Financial Performance and Outlook

As flagged in August and during Peoplein's AGM in November, FY24 has proven to be a challenging year due to softening economic conditions, higher interest rates, and a significant decline in business confidence across multiple sectors. The company delivered more than 8% organic growth in FY23, outperforming most of its competitors. However, the decline in business confidence has impacted private clients' demand, especially for high-margin and permanent roles, resulting in a reduction in profit for H1 FY24. Peoplein has been driving efficiencies to realign its cost base and reduce overheads to mitigate the impact of the challenging economic climate. The company expects the wider market downturn to be relatively short-lived, especially in the health sector, and anticipates an improvement in business confidence and higher margin demand in FY25. Peoplein is well positioned to return to a growth footing due to its long-term demand, diversity, commitment to efficiency, and experienced leadership team.

Outlook and Future Prospects

Despite the challenging economic conditions, Peoplein Limited remains optimistic about its future prospects. The company anticipates an improvement in business confidence and higher margin demand in FY25, driven by a proposed Industrial Relations Reform Bill and the potential growth opportunities in the Pacific Australia Labour Mobility Scheme and the Defence sector. Peoplein continues to secure Government work and is well positioned to support its clients as their investment confidence and needs increase. The company expects tough conditions to continue throughout H2 for professional services, but predicts recovery in FY25 as business confidence improves. Peoplein's strong market-positive brand and reliable sourcing strategies position it to win clients and grow market share, despite the impact of the decline in business confidence. The company's net debt position has increased, but it remains confident in its ability to trade through the challenging economic climate and return to a strong organic growth footing when conditions improve.