TIDMPAGE
RNS Number : 6534K
PageGroup plc
11 July 2017
11 July 2017
SECOND QUARTER AND FIRST HALF 2017 TRADING UPDATE
Q2 Highlights*
-- Record Group gross profit with growth of 7.7%, (+16.0% in reported)
-- Q2 results impacted by the timing of Easter
-- EMEA +13.2%; France +23%; Germany +13%; Southern Europe +11%
-- UK -4.5%; Michael Page -5%; Page Personnel -2%
-- Asia Pacific +6.8%; Asia +10%; Australasia -1%
-- Strongest growth in Americas +13.8%; US +17%; LatAm (ex Brazil) +18%; Brazil +2%
-- Technical disciplines fastest growing at +19.3%
-- Record headcount at 6,448, with 178 fee earners added in Q2 (98 in Q1)
-- Strong balance sheet, net cash c. GBP87m (Q2 2016: GBP74m)
* in constant currencies
Q2 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
-------------- ----------- --------------------------- ---------
Year-on-year % of Group Q2 2017 Q2 2016 % %
-------------- ----------- -------- -------- ------- ---------
EMEA 46% 83.7 67.6 +24.0% +13.2%
-------------- ----------- -------- -------- ------- ---------
UK 20% 36.6 38.3 -4.5% -4.5%
-------------- ----------- -------- -------- ------- ---------
Asia Pacific 20% 35.8 30.6 +17.1% +6.8%
-------------- ----------- -------- -------- ------- ---------
Americas 14% 25.9 20.4 +26.5% +13.8%
-------------- ----------- -------- -------- ------- ---------
Total 100% 182.0 156.9 +16.0% +7.7%
-------------- ----------- -------- -------- ------- ---------
Permanent 77% 139.4 120.9 +15.3% +7.0%
-------------- ----------- -------- -------- ------- ---------
Temporary 23% 42.6 36.0 +18.3% +10.2%
-------------- ----------- -------- -------- ------- ---------
H1 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
-------------- ----------- --------------------------- ---------
Year-on-year % of Group H1 2017 H1 2016 % %
-------------- ----------- -------- -------- ------- ---------
EMEA 46% 162.3 129.1 +25.7% +14.0%
-------------- ----------- -------- -------- ------- ---------
UK 21% 73.0 74.8 -2.3% -2.3%
-------------- ----------- -------- -------- ------- ---------
Asia Pacific 19% 66.7 56.5 +17.9% +5.5%
-------------- ----------- -------- -------- ------- ---------
Americas 14% 50.2 38.8 +29.5% +14.1%
-------------- ----------- -------- -------- ------- ---------
Total 100% 352.2 299.2 +17.7% +8.3%
-------------- ----------- -------- -------- ------- ---------
Permanent 76% 267.1 228.2 +17.1% +7.6%
-------------- ----------- -------- -------- ------- ---------
Temporary 24% 85.1 71.0 +19.8% +10.6%
-------------- ----------- -------- -------- ------- ---------
Commenting, Steve Ingham, Chief Executive Officer said:
"The Group delivered record gross profit, with growth of 7.7% in
constant currencies, despite the impact of Easter, which this year
fell in Q2 versus Q1 in 2016. As reported in our last trading
update, this inflated our Q1 growth rate of 9.1% and had the
reverse impact this quarter. H1 gross profit grew 8.3%.
"France, having increased fee earner headcount by 19%
year-on-year, delivered another excellent quarter, with growth of
23%. The UK was down 4.5%, with Easter falling in Q2 and client and
candidate confidence levels continuing to be impacted by Brexit and
political uncertainty. In our large, high-potential markets, growth
in Greater China accelerated, up 11%. Excluding Singapore where
market conditions remained challenging, South East Asia, delivered
growth of 35%. In the US, where we increased fee earners by 28%
year-on-year, we saw a strong improvement, up 17%. Latin America,
excluding Brazil, delivered growth of 18%. Finally, Germany
achieved a record quarter, up 13%.
"Our focus on investing in these large, high-potential markets,
which were collectively up 12%, as well as in businesses
experiencing strong growth, resulted in fee earner growth of 178 in
Q2 and 276 (+5.9%) on December 2016, up to a new record for the
Group. Total fee earner headcount now stands at 4,987, with total
headcount at 6,448.
"The Group continued to benefit from positive foreign exchange
movements, which in the quarter added c. GBP13m to our gross
profit, increasing reported gross profit by 8.3 percentage points
to 16.0%.
"We are pleased with the strong performance across the majority
of our regions, bearing in mind the timing of Easter. However,
there remain a number of uncertainties as we continue through 2017,
including the impact of Brexit negotiations and political
uncertainty in the UK, elections in Germany and Brazil's ongoing
macro-economic challenges. Costs from our headcount investments
including in new markets such as the Nikkei market in Japan, our
contracting business in Germany and our Page Personnel businesses,
continue.
"Performance levels have improved since the start of the year,
which has been reflected in Consensus moving up c. 13% since March
2017. Our outlook for full year operating profit is in line with
current Consensus*.
"Looking ahead, we will continue to focus on driving profitable
growth, while being able to respond quickly to any changes in
market conditions."
* Company compiled Consensus operating profit of GBP111.5m
Group Trading Update
PageGroup delivered record second quarter gross profit of
GBP182.0m, up 7.7% in constant currencies and 16.0% in reported
rates. The weakening of Sterling benefited Group gross profit by c.
GBP13m in the second quarter and by c. GBP28m in the first half. In
constant currencies, Michael Page grew 5.3% and Page Personnel
13.9%.
Headcount
Having added 227 fee earners in 2016, net fee earner additions
in H1 2017 were 276, with 98 in Q1 and 178 in Q2. Our operational
support headcount increased by 56 in the quarter. The majority of
these additions were to support the roll-out of our new global
finance system and the transition of our IT services into the
Cloud. Our fee earner to operational support staff ratio remained
at the record of 77:23, with 4,987 fee earners and a total
headcount of 6,448.
Perm/Temp mix
In constant currencies, Group gross profit from permanent
recruitment was up 7.0% in Q2, with temporary recruitment growing
faster at 10.2%. Permanent recruitment grew 15.3% in reported rates
to GBP139.4m and temporary recruitment grew 18.3% to GBP42.6m. This
resulted in a ratio of permanent to temporary recruitment of
77:23.
Q2 Gross Profit - Discipline analysis
Reported (GBPm) Constant
----------------------------------------------------------------- ----------- --------------------------- ---------
Year-on-year % of Group Q2 2017 Q2 2016 % %
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Accounting and Financial Services 37% 67.7 60.5 +11.9% +4.2%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Legal, Technology, HR, Secretarial, Healthcare 23% 41.2 34.8 +18.2% +9.5%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Engineering, Property & Construction, Procurement & Supply Chain 22% 39.9 31.0 +28.8% +19.3%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Marketing, Sales and Retail 18% 33.2 30.6 +8.7% +0.9%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Total 100% 182.0 156.9 +16.0% +7.7%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
H1 Gross Profit - Discipline analysis
Reported (GBPm) Constant
----------------------------------------------------------------- ----------- --------------------------- ---------
Year-on-year % of Group H1 2017 H1 2016 % %
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Accounting and Financial Services 37% 131.1 115.8 +13.1% +4.5%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Legal, Technology, HR, Secretarial, Healthcare 22% 79.0 66.9 +18.2% +8.3%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Engineering, Property & Construction, Procurement & Supply Chain 22% 76.3 58.4 +30.7% +20.1%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Marketing, Sales and Retail 19% 65.8 58.1 +13.3% +4.1%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Total 100% 352.2 299.2 +17.7% +8.3%
----------------------------------------------------------------- ----------- -------- -------- ------- ---------
Ten years ago our technical category of disciplines comprising
Engineering, Property & Construction and Procurement &
Supply Chain only represented c. 10% of the Group. As a result of
market changes and our continued strategy of diversification by
discipline, these technical disciplines now represent 22% of the
Group and grew 20% in H1 2017.
Geographical analysis (unless otherwise stated all growth rates
are in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
------------------ ---------------------- --------------------
(46% of Group) Reported Constant
------------------ ---------- ---------- --------- ---------
Q2 2017 vs. Q2
2016 83.7 67.6 +24.0% +13.2%
------------------ ---------- ---------- --------- ---------
H1 2017 vs. H1
2016 162.3 129.1 +25.7% +14.0%
------------------ ---------- ---------- --------- ---------
Headcount at 30 June 2017: 2,718 (31 March 2017:
2,628)
Gross profit growth in constant currencies:
* France (15% of Group) +23% on Q2 2016
* Germany (7% of Group) +13% on Q2 2016
----------------------------------------------------------------
EMEA grew Q2 gross profit 13.2% compared to 2016 (Q1 2017:
14.8%). Performance was strong in both Page Personnel and Michael
Page, with growth of 18% and 9% respectively. Continental Europe
grew 14%. The strong growth in France continued from Q1, with
growth of 23% in Q2 and good performances from both brands. Germany
saw a marginal improvement on Q1, growing at 13%. Spain grew 19%,
driving Southern Europe growth of 11%. Overall there were record
performances from seven countries: Belgium, France, Germany, Italy,
Poland, Portugal and Spain.
UK Gross Profit Growth Rate
(GBPm)
------------------------- --------------- --------------
(20% of Group)
------------------------- -------- ----- --------------
Q2 2017 vs. Q2 2016 36.6 38.3 -4.5%
------------------------- -------- ----- --------------
H1 2017 vs. H1 2016 73.0 74.8 -2.3%
------------------------- -------- ----- --------------
Headcount at 30 June 2017: 1,424 (31 March 2017:
1,405)
----------------------------------------------------------
The UK declined 4.5% in the quarter, with Brexit and political
uncertainty impacting confidence, particularly amongst our
multi-national clients. Our temporary business, impacted by the
timing of Easter, was down 9%, with permanent down 2%. Page
Personnel, which represented 22% of the UK, despite its greater
proportion of temporary business, delivered the better result,
declining -2% compared to -5% in Michael Page. Within the
disciplines, Technology was our best performing discipline, with
growth of 21%, while Financial Services was down 15%, albeit now
only representing 4% of the UK. The mix of gross profit and growth
rates of Private Sector (88%) and Public Sector (12%) were -5% and
+3% respectively.
Asia Pacific Gross Profit Growth Rates
(GBPm)
-------------------------- --------------- ------------------------
(20% of Group) Reported Constant
-------------------------- ------- ------ ----------- -----------
Q2 2017 vs. Q2 2016 35.8 30.6 +17.1% +6.8%
-------------------------- ------- ------ ----------- -----------
H1 2017 vs. H1 2016 66.7 56.5 +17.9% +5.5%
-------------------------- ------- ------ ----------- -----------
Headcount at 30 June 2017: 1,298 (31 March 2017:
1,238)
Gross profit growth in constant currencies:
* Asia (14% of Group) +10% on Q2 2016
* Greater China (8% of Group and 59% of Asia) +11% on
Q2 2016
* Australasia (6% of Group) -1% on Q2 2016
---------------------------------------------------------------------
Asia Pacific gross profit grew 6.8%, up from 3.9% in the first
quarter. Within Asia, which was up 10%, we saw strong performances
from our businesses in mainland China, where we have a higher
proportion of domestic clients, as well as an improved performance
from Hong Kong, which grew 11% in Q2 from -1% in Q1. Japan also
delivered an improved performance, with growth of 20%. South East
Asia, excluding Singapore, delivered growth of 35%, however trading
conditions in Singapore remained challenging. Australia grew by 1%
following our recent restructuring and improved through the
quarter.
Americas Gross Profit Growth Rates
(GBPm)
----------------------- --------------- --------------------
(14% of Group) Reported Constant
----------------------- -------- ----- --------- ---------
Q2 2017 vs. Q2 2016 25.9 20.4 +26.5% +13.8%
----------------------- -------- ----- --------- ---------
H1 2017 vs. H1 2016 50.2 38.8 +29.5% +14.1%
----------------------- -------- ----- --------- ---------
Headcount at 30 June 2017: 1,008 (31 March 2017:
943)
Gross profit growth in constant currencies:
* North America (8% of Group) +15% on Q2 2016
* Latin America (6% of Group) +13% on Q2 2016
* Brazil (33% of LatAm) +2% on Q2 2016
--------------------------------------------------------------
The Americas grew 13.8% in constant currencies. North America
was up 15% in the quarter, with the US up 17% and Canada down 5%.
Our strategy of diversification continued in the US, with strong
growth from our offices in Boston, Chicago and Los Angeles. The
Financial Services market in New York remained tough, down 18%, but
now represents only 26% of our US business (37% in Q2 2016).
Elsewhere, our other US businesses grew 38%. Latin America grew 13%
on 2016, and Brazil, 33% of Latin America, grew 2%. Elsewhere, our
other countries, which represent 67% of Latin America, had another
strong quarter, growing at 18%. Overall there were record
performances in Argentina, Mexico and Peru.
Financial Position
Other than the effects of trading in the first half and the
payment of a final dividend of GBP25.9m for 2016, there have been
no significant changes in the financial position of the Group since
the publication of the results for the year ended 31 December 2016.
Net cash at 30 June 2017 was approximately GBP87m (31 March 2017:
GBP86m).
Shares
At 30 June 2017 there were 326,587,784 Ordinary shares in issue,
of which 15,526,560 were held by the Employee Benefit Trust (EBT).
The rights to receive dividends and to exercise voting rights have
been waived by the EBT over 12,395,981 shares and consequently
these shares should be excluded when calculating earnings per
share. The total number of voting rights in the Company is
326,587,784.
Enquiries:
PageGroup +44 (0)20 3077 8425
Steve Ingham, Chief Executive
Officer
Kelvin Stagg, Chief Financial
Officer
FTI Consulting +44 (0)20 3727 1340
Richard Mountain / Susanne
Yule
Further information:
The Company will host a conference call and presentation for
analysts and investors at 8.30am today. The live presentation can
be viewed by following the link:
http://www.investis-live.com/pagegroup/5942580c9a0fb30c007c9b84/bvss
Please use the following dial-in numbers to join the
conference:
United Kingdom (Local) 020 3059 8125
All other locations +44 20 3059 8125
Please quote "PageGroup" to gain access to the call.
A presentation and recording to accompany the Q2 Trading Update
Presentation will be posted on the Company's website during the
course of the morning of 11 July 2017 at:
http://www.page.com/investors/investor-library/2017.aspx
PageGroup will issue its interim results for the six months
ending 30 June 2017 on 10 August 2017, followed by its Third
Quarter 2017 Interim Management Statement on 11 October 2017.
Cautionary Statement
This Second Quarter and First Half 2017 Trading Update has been
prepared solely to provide additional information to shareholders
to assess the Group's strategies and the potential for those
strategies to succeed. The Trading Update should not be relied on
by any other party or for any other purpose. This Trading Update
contains certain forward-looking statements. These statements are
made by the Directors in good faith based on the information
available to them up to the time of their approval of this Trading
Update and such statements should be treated with caution due to
the inherent uncertainties, including both economic and business
risk factors, underlying any such forward-looking information.
This Trading Update has been prepared for the Group as a whole
and therefore gives greater emphasis to those matters that are
significant to PageGroup and its subsidiary undertakings when
viewed as a whole.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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