Business report.
CPL’s profits up as their share prices fall but a
tough year is expected ahead.
CPL resources strive through the credit crunch despite rising levels of unemployment and labour costs. The company’s sales and revenue increases are highlighted in the release of the company annual report.
The report highlights a profit of €52.5 million for the year ending June 2008, a 7% increase on the previous year. Revenue is also up 32% to €257.6 million.
Speaking about these increases, Chairman John Hennessy said; “the global economic downturn and it effects on the labour market have had an effect on the company but the company is responding appropriately to these challenges by managing the costs.” It is by cost management that the company has grown in profitability over recent years.
CPL Resources Plc is Ireland’s leading provider of recruitment and Human resource outsourcing solutions. The company specialises in providing permanent, temporary and contract recruitment to leading service companies in the IT, Agricultural and pharmaceutical industries.
While revenue has increased share prices have been decreasing rapidly over recent weeks. The company has struggled to hold its share values, which dropped to a record low last week at 1.29cent a decrease from 5.4 cent for the same period last year. Share dividends have been set at 2.5 cent and are to be paid out at the end of October.
John Hennessy concluded his statement by saying that he expects the year ending June 2009 will be challenging and that the effects of the Irish economic downturn on the labour market “would be evident for some time.”
Chief executive for CPL Ann Heraty believes that “some of the weakest areas are construction related positions as well as banking and investment banking”. She added that other sectors including technology and foreign investment were “holding up reasonably well”.
In recent months CPL has opened new offices in Brno, Czech Republic, Krakow and Barcelona and has future plans to expand the business more. Speaking about this Ann Heraty said, “I suppose its globalisation but what companies want nowadays is a cross-Europe service”.
CPL is already planning for the year ahead and acknowledge the challenges that they will fact in the coming year. They are currently “looking for new ways to deliver value and outstanding service to our clients and candidates”. CPL also intends to respond to changing market conditions whilst managing their cost basis.
Challenges aside CPL believes that it is in a good position financially and resourcefully “to take advantage of any opportunities that may emerge to add to the business, through organic growth or acquisition, in specific markets and sectors”
Overview
In my article I looked at parts of the Annual report for CPL for the year ending June 2009. I was most interested in looking at increases/ decreases in profits and also the share prices. I was also interested in looking at how CPL plans to survive through the economic downturn. After finding all of these and writing the article I looked at how other publications covered these same questions and if they mentioned things that I had missed out on. Most of the articles I found were centred around the release of the annual report in the first week of September. There has been little coverage of CPL in the media since.
The best article that I found covered this issue was the Sunday Business Post on September 07, 2008. This article was published right after the release of the annual report and provided a detailed analysis of the outcome of the report. With the headline “CPL aiming to thrive through diversification” the Sunday Business Post highlighted the fact that CPL will face challenges in the coming year. The article looked at how CPL are aiming to tackle these challenges, “the company wants to build market share in Ireland”. Quotes were used from both CPL Chief Executive Ann Hearty and Goodbody analyst John Goode. I think that it was a good decision to use quotes from John Goode as it gave an unbiased perspective on the company.
Another good article I found was one published by The Irish Times on the 6th of September 2008. This article presented all the main figures from the annual report including the 7% increase in pre-tax profits and the gross profit. These figures were backed up with quotes from CPL Chairman John Hennessy and also John Goode the analyst from Goodbody that The Sunday Business Post also used. Whilst the first half of this article looked at the figures the second half looked a the challenges facing CPL in the coming year including the increase in unemployment and also CPL’s strategy for the year ahead.
On the same day as the Irish Times article The Irish Independent published a similar article, which looked at the same sales and profit figures. Unlike the above two publications a source from Goodbody was not used. Instead this paper used David Jennings analyst at Davy Stockbrokers who provided a critical analysis of the findings. In particular David Jennings looked at recruitment saying “Temporary recruitment fared better, relatively, down just 5pc in the second half”.
The Irish Independent also used quotes from CPL chairman John Hennessy, which reiterated the fact that the next year will be challenging. Quotes from Chief Executive Ann Hearty were also used to describe the challenges of the last few months “It has certainly been a year of two halves”. The one thing that the Irish Independent did cover which I had not noticed in the above two publication was the expansion of CPL into other countries including Barcelona and Krakow. This is something that I had covered in my own article but The Irish Independent is the only publication that I could find that acknowledged this point.
Recruiter (UK) covered CPL on the 17 September 2008. This was a short article of just over 100 words which compared CPL Ireland to Belfast firm Forde May Consulting. The main point of this article was that “The economic downturn in Ireland is not affecting staffing firms north of the border yet”. Although this article did not take a detailed approach to CPL’s challenges due to the economic downturn I think that by comparing it to a similar company was quite effective.
The first mention of CPL I could find by the Irish Examiner was on October 22 2008. In this short article The Irish Examiner stated that CPL were positive on expectations. They backed this up with a quote from CPL saying “The global economic down turn and its effects on the labour market have continued to have a marked effect”. This article didn’t go into any background detail or name any sources.
While the above five articles all mentioned CPL and the challenges it will face I think that The Sunday Business Post, The Irish Independent and The Irish Times all provided the best analysis of this. At the time of these publications I could not find any other publications that looked at as much detail. Since then there have been articles by The Daily Mail and the Financial Times as well as The Irish Examiner and Recruiter which I mentioned above but they all just provided limited detail and analysis.
