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HRnetGroup Q1 profit up 18.5% to S$19.3m

MAINBOARD-LISTED recruitment firm HRnetGroup on Friday posted an 18.5 per cent rise in net profit for its fiscal first quarter, thanks to its business in Hong Kong and Shanghai, as well as a boost from other income. 

For the three months ended March 31, net profit stood at S$19.3 million, up from S$16.3 million a year ago. 

This translated to earnings per share of 1.92 Singapore cents, versus earnings per share of 1.61 Singapore cents previously. 

No dividend has been declared, unchanged from the preceding year. 

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Revenue slipped 2.8 per cent to S$104 million, and gross profit was also down 2.8 per cent to S$35.4 million. 

Nonetheless, gross profit margin was maintained at 34.1 per cent, as contribution from its professional recruitment business rose to 65 per cent from 63 per cent a year ago. 

This was mainly attributable to resilience from HRnetGroup's North Asia markets - Hong Kong and Shanghai - the company said. 

While the number of placements dipped 3.3 per cent to 1,994 on the back of cautious hiring from clients particularly in Singapore, the increase in the value of each assignment meant that gross profit from professional recruitment remained relatively stable year on year at S$22.9 million, HRnetGroup said. 

The group's flexible staffing business also saw the monthly average number of contractor employees rise 2.8 per cent year on year to 11,920 employees, with growth coming predominantly from Hong Kong. 

Meanwhile, other income rose by S$4.7 million or 70.5 per cent to S$11.3 million, mainly due to a S$4.4 million unrealised gain from the revaluation of securities, and a S$1.1 million realised gain from the disposal of strategic investments, the company said. 

Looking ahead, HRnetGroup noted that it will focus more in its North Asia markets where there are higher growth opportunities. 

Adeline Sim, executive director of HRnetGroup said: "2019 was off to a relatively slower start with lingering uncertainties surrounding trade negotiations and regional political tensions, negatively affecting sentiments. Our results reflected that softer side of the market, as companies were cautious with regard to business expansion and hiring."

She added that the group's performance is in some ways dependent on the underlying economies they operate in.

"If the headwinds persist into the year, it will likely have an impact on our business, particularly for our biggest and most open market, Singapore. However, we hope that the commencement of our new staffing units in Malaysia in January and Shanghai in April... will provide some uplift to our performance," Ms Sim noted. 

HRnetGroup closed at S$0.77 on Thursday, down 0.65 per cent or 0.5 Singapore cent.