LONDON (ShareCast) - (Sharecast News) - Recruitment firm PageGroup said annual operating profit would be at the lower end of consensus expectations after fourth-quarter earnings fell 17% as market conditions worsened in Europe with companies low-balling offers to potential job candidates.
The company on Monday said gross profit for the final three months of the year fell to £196.7m, with the annual figure down16.4% to £842m.

"Market conditions remained challenging in Q4 and whilst most markets were sequentially stable, we experienced a further worsening in Europe, particularly in our two largest markets, France and Germany," said chief executive Nicholas Kirk.

He added that offers made to candidates are not as elevated as they were in 2022 and early 2023 as employers tightened budgets and became more risk averse, slowing the recruitment process and impacting time-to-hire.

"The conversion of interviews to accepted offers remains the most significant area of challenge as the ongoing macro-economic uncertainty continues to impact candidate and client confidence," Kirk said.

Page now expects 2024 full year operating profit, after one-off costs of around £5m relating to the closure of its shared service centres in the UK and Singapore, to be towards the lower end of the current market consensus range of £49m - £58.5m.

Gross profits in the UK fell 16.3%, with a 15.8% decrease across the European, Middle East and Africa division - which accounts for more than half of group earnings.

There were also more job losses as Page cut staff numbers - known as "fee earners" - by 2.4% to 5,370 during the quarter, while it also shed another 49 back office roles.

"Given recruitment is an area which can provide a warning signal for the wider economy, the consistent iffy performance of PageGroup and its peers is not exactly encouraging," said AJ Bell investment director Russ Mould.

"It can be argued these figures probably reflect budget decisions taken several months back, given the lengthy lead times involved in headcount changes by employers. This fourth-quarter update for 2024, therefore, will not yet capture the impact upon companies' headcount and hiring plans."

"Even so, investors will now look to trading updates from peers Robert Walters on Tuesday and Hays on Wednesday. A trio of weak statements could magnify calls for further interest rate cuts to boost the economy, but the sticky nature of inflation and foment in the UK gilt market both leave the Bank of England with an awkward juggling act."

Reporting by Frank Prenesti for Sharecast.com

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