UPDATE: Michael Page Reports Growth, Set For Unusual Recovery
April 09 2010 - 3:30AM
Dow Jones News
The U.K.'s second largest recruiter, Michael Page International
PLC (MPI.LN), Friday beat market expectations when it reported
first-quarter sequential growth in all its markets and said it
would improve its performance significantly this year.
The company is setting up for unusual recovery with permanent
recruitment, which makes up 77% of Michael Page's business,
boosting earnings. Traditionally temporary recruitment is the first
to recover.
As a result, Michael Page Chief Executive Steve Ingham said he
can comfortably beat last year's profit. He was also upbeat about
the recovery in the U.K. market as well saying that he is seeing
sequential growth in all areas.
Michael Page beat larger rival Hays PLC (HAS.LN), when it
reported a 7.9% sequential rise in first-quarter gross profit or a
2.9% rise on an annual basis.
It reported a 5.6% sequential growth in the EMEA region, 9.2% in
the U.K., 7.5% in Asia-Pacific and 15.3% in the Americas.
Rival Hays on Thursday reported another decline in net fees,
gave a cautious outlook, and said that one should not expect a
recovery in the U.K. market this year.
But Michael Page's earnings are boosted by the unusual strong
recovery in permanent placements, which saw a 13% rise year on year
in gross profit. Gross profit from temporary placements fell
20.3%.
Numis Securities analyst Steve Woolf said Michael Page
first-quarter earnings were "well ahead of expectations" with
particularly strong performance in the US, U.K. and Asia.
"This is an unusual recovery," led by permanent recruitment,
which is why Michael Page is doing better than Hays, he added.
At 0840 GMT Michael Page shares were up 6 pence or 1.4% to 429
pence, outperforming a 0.7% rise in the FTSE 250 Index. They news
also boosted Hays shares, which rose 1 pence or 1.3% to 117
pence.
It seems that after two years of struggling, as the credit
crunch and subsequent recession caused companies to contract and
reduce staff or stop hiring, recruiters are finally seeing some
positive signs in the market.
But while Michael Page can focus on boosting growth, Hays is
still grappling with potential job cuts in the public sector after
the May-general election and lack of candidate confidence that this
will cause.
Only one tenth of Michael Page's business is in the public
sector while 23% of Hays' net fees are in the public sector, which
has already dragged down improvements in earnings in the private
sector.
But as markets stabilized, both recruiters started hiring new
staff with Michael Page increasing headcount by 3.1% and Hays
increasing headcount by 2%.
But although Michael Page expects growth and CEO Ingham was
upbeat about prospects in all market he cautioned that visibility
remains low and that there are uncertainties in the US and U.K. He
added that "the outlook for the U.K., Continental Europe and North
America is less certain."
Michael Page shares closed Thursday at 424 pence giving the
company market capitalization of GBP1.32 billion. They've risen
11.7% since the start of the year on hopes that the improving
economic environment will translate into recruitment markets.
-By Anita Likus, Dow Jones Newswires; +44 20 7842 9407;
anita.likus@dowjones.com
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