AWF experienced the collapse of three construction sector clients in FY2018 that had a significant effect on the 'blue collar' side of the AWF business.
http://nzx-prod-s7fsd7f98s.s3-websit...389/288702.pdf
CEO Simon Bennet, aka 'The Bennster' vowed to fix things. So what actually happened over FY2020?
AWF divisional earnings can be found on p31 of AR2020.
Actual Trade & Receivables Writedown can be found on p52 of AR2020.
|
2014 |
2015 |
2016 |
2017 |
2018 |
2019 |
2020 |
AWF EBIT {A} |
$7.471m |
$7.498m |
$7.067m |
$8.726m |
$4,858m |
$1.260m |
$1.692m |
Actual Trade & Receivables Writedowns {B} |
($0.088m) |
($0.204m) |
($0.163m) |
($0.163m) |
($0.815m) |
($1.034m) |
($0.123m) |
Assuming no redeployment of Overseas Workers (creating a saving) {C} |
|
|
|
|
|
$1.500m (1) |
|
AWF EBIT - Writedowns {A}-{B}+{C} |
$7.559m |
$7.702m |
$7.230m |
$8.889m |
$5.673m |
$3.794m |
$1.569m |
(1) From 29th May 2019 market update
This table could be the indicator that AWF's construction sector woes are far from over. Remember that the latest figures are for the year ended 31st March 2020, and that includes only a few days of the lock down. The figures for 'AWF blue collar' are so bad I am wondering if I have made a mistake ??!?? Are the glory days of AWF Madison as a group over? It looks like 'The Bennster' has some explaining to do!
The June 8th announcement to the market contains some answers:
"The reduction in Group revenue was
driven by AWF, where revenue fell by 16% to $97.4 million (Snoopy edit: I think the technical market term for this is 'Ouch!'). This reflected a number of factors. The Group took the decision in 2018 to start relinquishing low margin, high cost-to-serve business in favour of customers with higher engagement levels. In addition, AWF has recently seen growth in permanent recruitment, which furnishes higher margins than temporary. Taken together, these factors constitute encouraging momentum by AWF towards a greater contribution to Group profitability."
A further insight into AWF's woes was given in the interim report from p6.
"Of more concern is the industrial relations activity we are seeing, with aggressive action by a number of Unions. We currently have a case before the Employment Relations Authority, taken by a Union, challenging the status of a number of our workers. We believe this case has no merit and, in fact, they are seeking an outcome that would have applied if the Employment Relations (Triangular Employment) Amendment Bill had not been amended prior to it becoming legislation.
This action has resulted in a shift away from contingent workers in a large client of ours who is seeking to take a more conservative balance of permanent and contingent workers."
"I believe the Union is effectively bullying a number of clients in this way. It is unfortunate for our workers as now a number have been left without work opportunities as a result. We are confident this will be resolved and may, in fact, result in stronger case law for legitimate providers of temporary employees. A balance of permanent and contingent workers optimises a workforce and provides good opportunities for workers, and we are confident common sense will prevail. The result has seen our white collar segment"
There were further problems redeploying workers from Christchurch (interim report p6).
"We had expected to resolve issues with the Labour Inspectorate relating to an investigation which commenced in May of 2018, following an exaggerated and sensationalised report by the media on 9 May 2018. This investigation stalled our renewal process for Accredited Employer status with Immigration New Zealand and resulted in us having little flexibility to redeploy many workers based in Christchurch, who were surplus to requirements, with large construction projects drawing to a close. We expect to announce a long overdue pathway forward in the coming weeks."
I take no 'momentum encouragement' myself from any of this! In a post Covid-19 world, are all the big corporates out there looking to hire new people? I can see a shift back to short term contracts, and more grindingly low margins for AWF blue collar temp workers.