Specialist recruiter Empresaria's (EMR) shares plummeted from 127p to 98p on news that it would miss full-year profit expectations, although management has said the group still expects to report record profits for the year.
The source of the trouble was Germany, a key market for the group. New legislation was introduced in the country in April this year requiring temp workers to be given equal treatment as permanent staff in terms of pay and working conditions. The impact of the legislation hit margins, an impact that is expected to persist through next year, although management expects it to have a positive effect on Germany’s employment market in the medium term. The market was also weak in the Middle East, where the costs of resizing the business created additional friction.
The challenges prompted downgrades to earnings forecasts by analysts. Broker Arden reduced profit expectations for the 2017 and 2018 full years by 12 and 15 per cent, respectively, and expect the shares to trade between 96 and 168p.
