Indian staffing firm TeamLease Services Ltd said on Wednesday its fourth-quarter profit fell more than expected, hurt by slowing revenue growth and weak demand, including from IT companies.The company’s consolidated net profit fell 22.4% to 239.4 million rupees ($2.93 million) in the quarter ended March 31, much steeper than the roughly 9% drop analysts, on average, had expected, according to Refinitiv IBES.Teamlease, which hires and trains people in various skills before placing them in a raft of companies, had warned its margins would be under pressure due to soft demand and the discontinuation of the government’s National Employability Enhancement Scheme (NEEM) in December.
The company said the scheme’s discontinuation lowered its headcount by 9,000 from September to March, and lowered its revenue by 50 million rupees in the March quarter. The company’s specialised staffing services, which includes IT staffing operations, also took a hit, given the uncertainty among Indian IT firms as their U.S. and European clients cut back on spending.Revenue in that business fell 4.5% in the latest quarter, accounting for less than 7% of total revenue for the first time in four years.However, revenue from general staffing, TeamLease’s biggest business, rose 13%, helping pull total revenue from operations up 11.5% to 20.27 billion rupees.
This is the second straight quarter in which total revenue growth came in below 15%, after six straight quarters of 20%-40% growth.However, a 12.3% jump in total expenses outweighed the 11.5% revenue growth in the latest quarter and weighed on margins.
Core profit margins fell to 1.7% from 2.3% year-on-year.”Margins have come under pressure due to external variables impacting the higher-margin businesses of specialised staffing and degree apprenticeship,” said Managing Director Ashok Reddy.TeamLease’s shares closed 2.68% higher at 2,316.50 rupees ahead of the results.
