Blue collar recruitment firm Staffline has reported revenues ahead of forecasts but margins have been hit by losses at the Welfare to Work division

The company supplies up to 30,000 workers per day in the food processing, manufacturing, e-retail and logistics sectors. In the six months to the end of June revenues climbed to £163.9m, 36% up on the same period of 2011.

However, the operating margin dropped sharply, from 11.8% last year to 9.3% this year.

The problem has been start up costs on a number of new contracts and a £0.4m loss at the Welfare to Work division.

The drop in margin saw profits before tax drop from £2.9m last year to £2.8m this year. This is also the likely reason for a 1% drop in the share price on Monday morning.

Staffline's Chief Executive, Andy Hogarth, said 2012 was proving to be "more challenging" than 2011.

BS

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