Staffline shares fall over 50%!!

Friday, 17th May 2019 09:40 - by Rajan Dhall

Recruiting company Staffline's shares have capitulated this morning after the Co. issued a profit warning. 

The company is heavily reliant on supplying temp workers to food factories and most of their workers are from overseas. Staffline has also said they have suffered from an accounting issue which led to some customers away from signing new contracts with the firm. Its customers are now looking to employ permanent staff rather than the temp staff Staffline were supplying and a key source of revenue was the automotive supply arm which is now dwindling as the customers are employing permanent staff.

The group downgraded its EBIT forecasts for 2019 to GBP 23-28mln with analysts expecting around GBP 43mln. There is also a massive cloud hanging over the business which relates to the Group's historical compliance with National Minimum Wage Regulations 2015.

Looking at the monthly chart below its clear to see the company is in trouble. The political situation in the UK is getting more and more complex as UK PM May sets out her plan to leave parliament. Currently, Boris Johnson is the bookies favourite to take over and he is a Brexiteer who has firmly stated he has no problem leaving the EU without a deal. This means an end to freedom of movement and less staff for the group. In the future look out for news flow surrounding the audit from KMPG and the resolution from the minimum wage scandal.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.