Michael Page sees demand for staff fall

By This Is Money
Updated:

 

Recruitment consultant Michael Page International today reported a 32.3% drop in first-quarter profits to £95m as demand for employees weakened.

London commuters arrive in the City

Hard times: Recruitment firms report falling demand for workers.

The group said UK gross profit fell to £28.9m from £47.1m in the three months to March 31, while group headcount decreased by 809 to 4,134.

Michael Page said it will continue to reduce its cost base to reflect lower levels of activity but it is not planning further staff reductions.

Chief executive Steve Ingham pointed out the group generated a higher gross profit in March than in either of the first two months of the quarter.

'However, market conditions continued to weaken during the first quarter of 2009, with the impact of the financial crisis now evident in virtually every market and discipline in which we operate, albeit to varying degrees,' he said.

The group operates through around 150 offices in 28 countries worldwide. It employs more than 1,350 people in the UK, including at offices at Cardiff, Newcastle and Canterbury.

Michael Page said only its UK business serving the public sector and the smallest discipline of property and construction generated year-on-year growth in the first quarter. Finance and accounting placements in the UK - responsible for 16% of group trading - saw profits fall by 37% in the first quarter. Legal, technology, human resources and secretarial fell by 42%. Headcount in the UK reduced by 262 in the quarter, equivalent to 16% of the workforce.

Michael Page shares opened 4% lower following the update.

Panmure Gordon analyst Paul Jones said he was unconvinced that trading patterns were close to levelling out. He added: 'The job market continues to decline worldwide, with jobs being pulled and negotiations taking much longer than before due to caution from both sides. We believe this will continue for the remainder of the year, and could even get much worse over what could be a quiet summer.'

With little further headcount reduction being planned, the broker is worried costs could be out of kilter with profits until the market turns up.

Panmure has reduced its forecasts for both 2009 and 2010 to almost break-even, compared with its previous £60m for this year and £29.3m next year.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.

Most watched Money videos

{"status":"error","code":"499","payload":"Asset id not found: readcomments comments with assetId=1671696, assetTypeId=1"}