PageGroup cautious as recruitment weakness continues
By Josh White
Date: Monday 14 Oct 2024
(Sharecast News) - PageGroup reported a 13.5% drop in group gross profit for the third quarter on Monday, reflecting ongoing challenges across global recruitment markets.
The FTSE 250 recruiter said in a trading update that gross profit fell to £201.4m, with the company highlighting softening conditions in key regions, especially Europe and Asia Pacific.
It also reported a 16.7% decline in reported rates due to currency movements.
European markets were particularly hard hit, with Europe, Middle East and Africa (EMEA) gross profit down 15.1% year-on-year, driven by declines of 16% in France and 19% in Germany.
The Americas showed a 10.3% decline, with the US down 11%, while UK gross profit fell 13.5% as employers deferred hiring decisions and candidates were cautious about accepting offers.
Asia-Pacific reported the sharpest drop, with gross profit down 16.8%, including a 25% decline in Greater China.
PageGroup noted that client and candidate confidence remained low, leading to slower hiring processes.
The company also observed a shift towards temporary recruitment, which outperformed permanent hiring, as businesses sought more flexible staffing options.
Temporary recruitment was down 8.6%, while permanent hiring fell 15.3%.
Despite the tough environment, PageGroup said its net cash position improved to £93m at the end of the quarter, up from £57m three months earlier.
However, productivity per fee earner dropped by 4%, as the company maintained headcount levels despite the weakening demand.
Looking ahead, the firm said it expected full-year operating profit to be broadly in line with market expectations of £58m.
However, the trading environment remained uncertain, and the board said September showed no signs of recovery following the usual summer lull.
"We continued to see challenging market conditions throughout the group in the third quarter, with no improvement in September after the seasonally quieter summer months," said chief executive officer Nicholas Kirk.
"Whilst most markets were sequentially stable, we experienced softer activity and trading in a number of European countries including France and Germany.
"The conversion of interviews to accepted offers remains the most significant area of challenge as the ongoing macroeconomic uncertainty in the majority of our markets continues to impact candidate and client confidence negatively."
Kirk said in that context, permanent recruitment continued to be impacted more than temporary.
"We continue to see the benefits of our investments in innovation and technology - Customer Connect is supporting productivity and enhancing customer experience, Page Insights is providing real time data to inform business decisions for both Page and our customers, and we continue to work with our partners to deploy AI and automation tools into our working environment.
"Given the group's fundamental strengths, we believe we will continue to perform well despite the challenging environment, and we are confident in our ability to implement our strategy, driving the long-term profitability of the group."
At 0821 BST, shares in PageGroup were down 0.11% at 370p.
Reporting by Josh White for Sharecast.com.
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