Alexander Forbes lays bare South Africa’s unemployment reality

JSE-listed financial services group Alexander Forbes has seen the impact of business closures and retrenchments from the Covid-19 pandemic filtering through its members.

The group on Thursday (3 December) published its unaudited results for the six months ended September 2020,  showing a 3% decline in operating income from continuing operations to R1.54 billion, with performance impacted by the challenging economic environment.

Profit from continuing operations (before non-trading and capital items) of R382 million, down 5% year on year due to the decline in top-line growth and the impact of stranded costs.

Headline earnings per share from continuing operations improved 6% to 18.8 cents, however, HEPS for total operations of 14.5 cents, declined 41%, it said.

An interim dividend of 13 cents (2019: 18 cents) per share was declared.

Worryingly, Alexander Forbes noted that its active member base has shrunk to 895,000 members, from 914,000 active members at its full year 2020 reporting.

It pointed out that as many as 15,000 members had been retrenched between June and September, amid the fallout from the Covid-19 pandemic, and resulting lockdown. The most retrenchments were recorded during September (4,613).

South Africa’s official unemployment rate climbed to a record high of 30.8% for the third quarter of 2020, data from Statistics South Africa (Stats SA) showed last month. The expanded definition, which includes discouraged jobseekers, climbed to more than 43%, with unemployment increasing 2.2 million (52.1%) to 6.5 million, compared to the second quarter of 2020.

Alexander Forbes said that the impact of Covid-19 and the expected future consequences on the economy will impact its original growth and cost targets.

“Whilst our clients are experiencing the benefits of our client-centric and advice-led consulting approach, the top line will continue to be under pressure for the next 18 to 24 months,” it said.

“Despite the tough trading conditions that the business has faced over the past six months, the core business remains stable,” said chief executive officer, Dawie de Villiers.

“We remain confident in our advice-led strategy and believe that continued delivery against our objectives will reflect positively in the performance of the business over the medium-term.”

Read: Ramaphosa promised to create 800,000 jobs in South Africa – here’s how it’s going

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Alexander Forbes lays bare South Africa’s unemployment reality