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Work Service after 3 quarters: solid results and a new Group strategy for the years 2018-2020

Through the first nine months of 2017, the revenues of the Work Service Capital Group have exceeded PLN 1,975 billion with an operating profit of almost PLN 52 million. Including the results of continuing activities, all key business factors reached double-digit growth over the previous year. The last 3 quarters were a time of considerable transformation for the Group with respect to both its structure and business model. This period saw the production of a new Work Service development strategy for the years 2018-2020 that assumes increased cross-border activity, expansion into new market segments, improved business profitability, and higher cost efficiency.

The “Work Service 2020” strategy establishes the Work Service Capital Group’s main areas of operation and development under the new structure following the sale of the IT Kontrakt and ProService groups.

“Our main goal is to strengthen our leadership in the region. We are focusing on the markets of Central Europe which are very stable and have tremendous demand for flexible forms of employment. We want Work Service to be in the top three in the market in all geographical markets where it operates. For this purpose, we will strive to maintain double-digit revenue growth. We want to reach above-average market growth and profitability by the end of the FY2020,” saysWork Service S.A. CEO Maciej Witucki.

Business development plan

The Work Service Group wants to take advantage of the opportunity to become the leading agent on the international market, too. It will mean an extension of the domestic model, with its strong support, to the development of cross-border exchange through expansion of the customer database to focus on international blue-chip customers. The development of long-term relationships and the simultaneous cooperation in many markets will produce a higher added value and consequentially more stable profit. The Group projects that it will have more than 20,000 Polish employees and double the number of Ukrainian employees in Poland in 2018 to around 10,000, while it projects growth in the number of Poles in Germany of over 1500 employees.

“The margins on cross-border services can be several times higher than on domestic ones. We want to focus on them to improve our earnings and take full advantage of the potential in the migration trends prevalent in our region of Europe. Due to our position in the region, we have access to dynamically developing markets which are in need of thousands of workers and trying to cope with growing HR deficits,” notes Maciej Witucki.

Work Service also presented its plan to simplify its organizational structure, which will see the establishment of uniform domestic entities operating mainly in the field of part-time employment. The Group will be rounded out with three professional companies handling cross-border services and full-time recruitment. The Group also plans stronger expansion into new market segments and a growing focus on providing staff for BPO/SSC centers, which will attract external employees of higher competencies.

Strategic financial priorities

In establishing its financial goals for the years 2018-2020, the Work Service Group presented its plans for both cost efficiency and asset and capital profitability. Its main objective is to maintain double-digit revenue growth at above-average profitability until the end of the 2020 fiscal year. To do this, Work Service intends to reduce its debt load considerably, as early as in 2018. One of the main elements aimed at improving its debt ratios in the first year of the strategy is the conclusion of the Exact Systems Group sale, which is planned for the first half of 2018. According to the finance strategy planned by the Capital Group, the Management Board wants to keep the net debt-to-EBITDA ratio at a maximum of 2.5.

“We want to have a stable development strategy, which is why we are focusing on light structures and higher efficiency. We have already completed the initial processes aimed at reducing our expenses, but we want the indirect cost rate to drop to under 9% by the year 2020. Simultaneously, the planned business activity will expand profitability in a sustainable manner. Over the next 3 years, we are expecting the EBIT margin to grow annually by 200-300 base points,” adds Maciej Witucki.

Development on a solid foundation: results after the first three quarters of 2017

Over the past 9 months, the revenues of the Work Service Capital Group exceeded 1 975 billion, up by almost 8.5% over the previous year. Over the same time, the Work Service Group’s operating profit reached PLN 51.9 million while its EBITDA reached PLN 64.5 million. However, it should be noted that the Group’s makeup was transformed considerably in recent months due to the sale of its Russian companies and the IT Kontrakt Group. In effect, the continuing activity data provides the more comparable business results since it covers the entities currently operating under the Group in relation to their results from last year.

“The results of continuing activity point to an 11% growth in both revenue and profit. In turn, EBIT and EBITDA are growing at the pace of 16% and 14%, respectively. It shows that the business we are taking into the new year and the new strategy has a solid foundation and outlook for further dynamic development,” concludes Work Service S.A. CEO Maciej Witucki.

Due to the cancellation of two planned acquisitions, and lower than forecasted results of selected business lines, the company lowered its projected 2017 operating profit. The adjusted projection puts EBIT at PLN 68 million, down from the initially projected PLN 85,3 million.

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The Work Service Capital Group was established in 1999 and is the biggest provider of comprehensive HR services in Central and Eastern Europe. It operates in Poland nationwide through a chain of branches and abroad in 16 countries (Russia, Germany, the Czech Republic, Turkey, Romania, Hungary, Slovakia, Great Britain, Belgium, France, Switzerland, Slovenia, Croatia, Serbia, Bulgaria, China). The company offers professional services in personal consulting, HR restructuring, recruitment, and HR outsourcing. Over 3000 companies have already chosen Work Service as a business partner. 50 000 people each day and 300 000 employees each year find employment through companies operating under the Work Service Capital Group. Work Service is quoted on the Warsaw and London Stock Exchanges. For more information, please visit www.workservice.pl

 

Media contact:

Andrzej Kubisiak
Analysis and Communication Department Director, Work Service S.A.
mobile: +48 512 176 030      
e-mail: andrzej.kubisiak@workservice.pl

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Press Officer

Andrzej Kubisiak


Andrzej Kubisiak

tel. +[48] 512 176 030
andrzej.kubisiak@workservice.pl

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