RECRUITMENT FIRM CPL Resources has posted a 7 per cent rise in pre-tax profits to €20.7 million for the year to June, but warned of a "challenging" year in 2009.

Group chairman John Hennessy described the 12 months to last June as a year of two very different halves, with profits falling in the second six months.

In January, CPL reported profit before tax for the six months to December 31st, 2007, of €11.7 million, up 45 per cent. However, profit before tax was 23.8 per cent lower in the second half, it said.

While gross profit rose by 22 per cent to €52.5 million for the year, it was 11.3 per cent lower in the second half of the year.

Gross profit from permanent placements declined by 22 per cent in the second half, while gross profit from temporary placement declined by 5 per cent, reflecting the greater resilience of the temporary business, CPL said.

In the six months to June 30th, 2008, fees from CPL's permanent placement business fell by 18 per cent to €11.1 million, compared with €13.5 million in the first six months.

Gross profit of €13.6 million generated in the six months to June 2008 from its temporary placement business was slightly behind the first six months gross profit of €14.3 million.

Banking, construction and manufacturing have experienced the most severe impact from the downturn, according to CPL. However, its technology division, which represents 21 per cent of gross profit, fared well compared to other sectors, it said.

"The group has been operating in a changing and more difficult environment, reflecting a significant decline in employment growth in Ireland and an increase in the numbers on the Live Register. It is the nature of our business that we are exposed at an early stage to the effects of downturns in the markets and sectors in which we operate," said Mr Hennessy.

He said it was inevitable that a reduction in business activity and confidence would affect recruitment in the short-term, but that diversification of its business was helping the company to deal with more challenging times.

"We believe that CPL is pursuing the correct strategy, as the short-term earnings pain should be rewarded in the medium- to long-term as the company diversifies internationally," said John Goode, an analyst with Goodbody Stockbrokers.

"Ample cash levels and a proven management team will see them through the current downturn and emerge stronger and more diversified."