TIDMPAGE
RNS Number : 4856D
PageGroup plc
10 October 2018
10 October 2018
PageGroup plc
THIRD QUARTER 2018 TRADING UPDATE
Q3 Gross profit growth of 19.7%
Q3 Highlights*
-- Group gross profit growth of +19.7% (+17.2% in reported rates)
-- Large, High Potential markets (36% of Group) +30%
-- EMEA +20.9%; France +21%; Germany +34%
-- Asia Pacific +27.7%; Greater China +31%; SE Asia +24%; Australia +17%
-- UK +0.8%; Michael Page -4%; Page Personnel +17%
-- Americas +30.1%; US +26%; Latin America +34%
-- Technical disciplines (23% of Group) fastest growing at +23.9%
-- Record headcount of 7,718; +242 fee earners in Q3; +561 (+10.2%) year to date
-- Strong balance sheet, net cash of c. GBP122m (Q2 2018: c. GBP87m, Q3 2017: c. GBP109m)
-- Interim and special dividends paid today, 10 October, of GBP53.9m or 16.83 pence per share
-- 2018 operating profit expected to be marginally ahead of consensus**
* in constant currencies except where stated
** Company compiled consensus of GBP138.7m
Q3 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group Q3 2018 Q3 2017 % %
----------- -------- -------- ------- ---------
EMEA 46% 94.6 79.3 +19.3% +20.9%
----------- -------- -------- ------- ---------
Asia Pacific 22% 46.0 37.0 +24.1% +27.7%
----------- -------- -------- ------- ---------
UK 17% 35.2 34.9 +0.8% +0.8%
----------- -------- -------- ------- ---------
Americas 15% 31.9 26.0 +22.7% +30.1%
----------- -------- -------- ------- ---------
Total 100% 207.7 177.2 +17.2% +19.7%
----------- -------- -------- ------- ---------
Permanent 76% 157.9 133.0 +18.7% +21.4%
----------- -------- -------- ------- ---------
Temporary 24% 49.8 44.2 +12.6% +14.8%
----------- -------- -------- ------- ---------
Steve Ingham, Chief Executive Officer, said:
"The Group delivered gross profit growth of 19.7% in constant
currencies, its highest quarterly growth rate since Q3 2011, with
22 countries growing over 20% and all of our four regions
delivering growth.
"Our Large, High Potential markets grew 30% collectively, with
all five delivering record quarters. Germany continued its recent
strong performances, with growth of 34%. In Asia Pacific, Greater
China improved from its Q2 growth rate of 18%, delivering growth of
31%. We also saw continued improvement in South East Asia, with
growth of 24% collectively. The US grew 26%, Latin America was up
34%, including Brazil up 20%, and the other five countries in Latin
America up 41% collectively.
"In our six Large, Proven markets, the UK returned to growth, up
0.8%, despite continued Brexit related uncertainty, and notably,
Page Personnel, which grew 17%. France grew 21% with strong results
from both Michael Page and Page Personnel. Italy and the
Netherlands continued to perform well, up 18% and 14%,
respectively. Spain, despite the continued challenges in Catalonia,
grew 8%, in line with its Q2 growth rate. In Australia, following
our investments in fee earner headcount and a new office in
Canberra, we continued to see improvement, with growth of 17%.
"Outside these two categories, we saw strong growth in the
majority of our other markets. India and Japan had record
performances as a result of our continued investment, growing 68%
and 38% respectively.
"Demonstrating our continued confidence in many of our markets,
the Group added 242 fee earners in the quarter and now has a record
total headcount of 7,718. This investment has been mainly into our
Large, High Potential markets.
"We will continue to focus on driving profitable growth as we
progress towards our Vision of 10,000 headcount, GBP1bn of gross
profit and GBP200m - GBP250m of operating profit. We are pleased
with the Group's continued strong performance and now expect 2018
operating profit to be marginally ahead of the consensus of current
market forecasts*."
*Company compiled consensus operating profit of GBP138.7m
Group Trading Update
PageGroup delivered third quarter gross profit of GBP207.7m, up
19.7% in constant currencies and 17.2% in reported rates. Adverse
foreign exchange movements decreased our reported gross profit by
2.5 percentage points or c. GBP4m. Cumulatively to the end of Q3,
foreign exchange decreased our reported gross profit by c. GBP10m.
In constant currencies, Michael Page grew 19% with Page Personnel
growing slightly faster, up 21%.
Headcount
Having added 786 fee earners in 2017 and 319 in H1 2018, net fee
earner additions increased in Q3 by a further 242 mainly in our
Large, High Potential markets as well as those where we saw the
greatest growth. Our operational support headcount increased by
just 19 in the quarter and our fee earner to operational support
staff ratio was maintained at 78:22, representing 6,058 fee earners
and a total headcount of 7,718.
Perm/Temp mix
Gross profit from permanent recruitment grew 18.7% in reported
rates and 21.4% in constant currencies, to GBP157.9m (Q3 2017:
GBP133.0m). Gross profit from temporary recruitment grew 12.6% in
reported rates and 14.8% in constant currencies, to GBP49.8m (Q3
2017: GBP44.2m). This resulted in a ratio of permanent to temporary
recruitment of 76:24.
Q3 Gross Profit - Discipline analysis
Reported (GBPm) Constant
Year-on-year % of Group Q3 2018 Q3 2017 % %
----------- -------- -------- ------- ---------
Finance
Accounting and Financial Services 36% 75.3 64.4 +16.9% +19.5%
----------- -------- -------- ------- ---------
Professional Services
Legal, Technology, HR, Secretarial, Healthcare 24% 48.9 40.7 +20.0% +22.8%
----------- -------- -------- ------- ---------
Technical
Engineering, Property & Construction, Procurement & Supply
Chain 23% 48.7 40.0 +21.9% +23.9%
----------- -------- -------- ------- ---------
Marketing, Sales and Retail 17% 34.8 32.1 +8.2% +11.0%
----------- -------- -------- ------- ---------
Total 100% 207.7 177.2 +17.2% +19.7%
----------- -------- -------- ------- ---------
Geographical analysis (unless otherwise stated all growth rates
are in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
(46% of Group) Reported Constant
---------- ---------- ----------- -----------
Q3 2018 vs. Q3 2017 94.6 79.3 +19.3% +20.9%
---------- ---------- ----------- -----------
Headcount at 30 September 2018: 3,290 (30 June 2018: 3,175)
* France (15% of Group) +21%
* Germany (8% of Group) +34%
EMEA Q3 gross profit grew 20.9%, up from 18.6% in Q2 2018 to
GBP94.6m. Both Michael Page and Page Personnel continued to deliver
strong performances, with growth of 21% and 20%, respectively.
Following an investment in fee earner headcount of 98 (+16%) over
the last year, France, representing 15% of the Group, grew 21%.
Germany grew 34%, a seventh consecutive record quarter, with our
interim business growing by over 50%. Benelux grew 20% and Southern
Europe grew 13%, with Italy up 18% and Spain up 8%, despite
continued challenges in Catalonia. The Middle East and Africa grew
19% with particularly strong growth in the UAE. Given these
continued favourable trading conditions, we invested further in our
fee earner headcount, up 108 in the quarter.
Asia Pacific Gross Profit (GBPm) Growth Rates
(22% of Group) Reported Constant
---------- ---------- ----------- -----------
Q3 2018 vs. Q3 2017 46.0 37.0 +24.1% +27.7%
---------- ---------- ----------- -----------
Headcount at 30 September 2018: 1,719 (30 June 2018: 1,660)
* Asia (17% of Group) +32%
* Greater China (10% of Group and 60% of Asia) +31%
* Australasia (5% of Group) +16%
In Asia Pacific, our second largest region, gross profit
increased 27.7%, up from 18.4% in Q2, with five countries achieving
record quarters. Greater China, one of our Large, High Potential
markets grew 31%, a second consecutive record quarter, up
significantly from 18% in Q2, with both Hong Kong and Mainland
China performing at similar levels. South East Asia, another of our
Large, High Potential markets grew 24%, with continued strong
growth in Singapore, up 35%. In Japan, where we have increased fee
earner headcount by 27% over the last year, our focus on both the
Gaishikei and Nikkei markets continued to bring success, with
growth of 38%, a record quarter. India, where we have over 100 fee
earners, delivered its second consecutive record quarter, up 68%,
more than double its Q2 growth rate. In Australia, growth continued
to accelerate, up from 10% in Q2 to 17% in Q3, following our
strategic investment in fee earners in 2017 and the opening of our
Canberra office last year. Overall fee earner headcount in the
region grew 33 for the quarter.
UK Gross Profit (GBPm) Growth Rate
(17% of Group)
---------- ---------- -----------------
Q3 2018 vs. Q3 2017 35.2 34.9 +0.8 %
---------- ---------- -----------------
Headcount at 30 September 2018: 1,418 (30 June 2018: 1,395)
The UK saw marginal growth of 0.8% in the quarter, despite
Brexit and political uncertainty continuing to impact confidence.
Page Personnel, which represents 26% of the UK, achieved a record
quarter, growing 17%. Michael Page, which is more senior candidate
focused and therefore more impacted by uncertainty, declined -4%.
Fee earner headcount increased by 24 in the quarter into the
businesses where we saw the greatest opportunities for growth.
Americas Gross Profit (GBPm) Growth Rates
(15% of Group) Reported Constant
---------- ---------- ----------- -----------
Q3 2018 vs. Q3 2017 31.9 26.0 +22.7% +30.1%
---------- ---------- ----------- -----------
Headcount at 30 September 2018: 1,291 (30 June 2018: 1,227)
* North America (9% of Group) +27%
* Latin America (6% of Group) +34%
The Americas was our fastest growing region and grew 30.1% to
GBP31.9m. North America grew 27%, with the US +26% and Canada +35%,
both achieving record quarters. In the US, our strategy of
diversification continued, with strong performances from our
regional offices, in particular Boston, Houston and Los Angeles, as
well as disciplines outside of Financial Services. Latin America,
where we now have a headcount of over 700, grew 34%. The Brazilian
market continued to recover, growing 20%, broadly in line with our
Q2 growth rate. In Mexico, where we have invested significantly in
our fee earner headcount, up 29% over the last year, we grew by
50%, albeit with a particularly soft comparator due to the impact
of the earthquake last year. Elsewhere, Argentina, Chile, Colombia
and Peru grew 34%, collectively. In line with our strategy of
investing in our Large, High Potential markets, we have added 77
fee earners across the region in the quarter.
Financial Position
Save for the effects of trading in the third quarter described
above and the forthcoming payments of the 2018 interim and special
dividends amounting to GBP53.9m which are being paid today, there
have been no other significant changes in the financial position of
the Group since the publication of the results for the half year
ended 30 June 2018.
Net cash at 30 September 2018, before the payment of the
dividends, was in the region of GBP122m (30 June 2018: c.
GBP87m).
Shares
At 30 September 2018 there were 327,919,627 Ordinary shares in
issue, of which 11,074,745 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 7,775,732 shares and
consequently these shares should be excluded when calculating
earnings per share. The total number of voting rights in the
Company is 327,919,627.
Cautionary Statement
This Third Quarter 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.
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
The Company will host a conference call and presentation for
analysts and investors at 8:30 am today. The live presentation can
be viewed by following the link:
https://www.investis-live.com/pagegroup/5b991ae95bdb551000dfedd7/pggp
Please use the following dial-in numbers to join the
conference:
United Kingdom (Local) 020 3936 2999
All other locations +44 20 3936 2999
Please quote participant access code 36 66 75 to gain access to
the call.
A presentation and recording to accompany the call will be
posted on the Company's website during the course of the morning of
10 October 2018 at:
https://www.page.com/investors/investor-library/2018.aspx
The Group will issue its Fourth Quarter Trading Update on 14
January 2019 and its Full Year Results on 6 March 2019.
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END
TSTBRBDGCUGBGIC
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