TIDMPAGE
RNS Number : 3357W
PageGroup plc
17 April 2023
17 April 2023
RECORD RESULT IN EMEA; ONGOING CHALLENGING MARKET CONDITIONS
Q1 Highlights*
-- Group gross profit of GBP262.7m, -2.4% vs. 2022 (+1.8% in reported rates)
-- EMEA +6.8%: France +3%; Germany +11%
-- Americas -7.6%: US -15%; Latin America +4%
-- Asia Pacific -17.0%: Greater China -42%; SE Asia -12%; Japan +5%; India flat
-- UK -9.4%: Michael Page -14%; Page Personnel +4%
-- Large, High Potential markets (36% of Group) -9%; excluding Greater China -1%
-- Decrease in fee earner headcount of 304 to 6,639 (Q4 2022: 6,943)
-- Productivity down 8% on Q1 2022
-- Strong cash position, net cash of c. GBP105m (Q4 2022: c. GBP131m, Q1 2022: c. GBP122m)
-- Full Year operating profit expected to be in line with company compiled consensus of GBP140m
* In constant currencies vs 2022 except where stated
otherwise
Q1 Gross Profit Analysis
Reported (GBPm) Constant
Year-on-year % of Group Q1 2023 Q1 2022 % %
----------- -------- -------- ------- ---------
EMEA 55% 145.4 129.7 +12.2% +6.8%
----------- -------- -------- ------- ---------
Americas 16% 42.7 42.9 -0.7% -7.6%
----------- -------- -------- ------- ---------
Asia Pacific 16% 41.2 48.5 -15.1% -17.0%
----------- -------- -------- ------- ---------
UK 13% 33.4 36.9 -9.4% -9.4%
----------- -------- -------- ------- ---------
Total 100% 262.7 258.0 +1.8% -2.4%
----------- -------- -------- ------- ---------
Permanent 74% 195.7 202.0 -3.1% -7.2%
----------- -------- -------- ------- ---------
Temporary 26% 67.0 56.0 +19.5% +14.9%
----------- -------- -------- ------- ---------
Nicholas Kirk, Chief Executive Officer, PageGroup, said:
"The Group delivered strong results in the quarter, with a
record performance from EMEA, where the standout result was
Germany. However, tough market conditions continued in Asia, the US
and the UK. Overall, Group gross profit declined 2.4% in constant
currencies against Q1 2022. The Group benefited from positive
foreign exchange movements, increasing our reported gross profit by
GBP10.8m. As a result, we grew 1.8% in reported rates.
"The challenging conditions we saw towards the end of 2022
continued into 2023, with lower levels of both candidate and client
confidence resulting in delays in decision making and candidates
being more reluctant to accept offers. Reflecting the uncertainty,
temporary recruitment outperformed permanent, as clients sought
more flexible options. Our fee earner headcount reduced by 304
(-4.4%) in Q1, with reductions in all regions. However, due to the
level of investment made in 2022, our total headcount remains 510
(+6.2%) higher than at the end of Q1 2022. Consequently, gross
profit per fee earner, our measure of productivity, declined 8%
compared to Q1 2022.
"Looking forward, there remains a high level of global
macro-economic and political uncertainty in the majority of our
markets. However, against this backdrop, we continue to see
candidate shortages and good levels of vacancies. Given our highly
diversified and adaptable business model, with a cost base that can
be adjusted rapidly and a strong balance sheet, we believe we will
continue to perform well despite the uncertainty and, at this early
stage of the year, expect 2023 operating profit to be in line with
company compiled consensus of GBP140m."
Geographical Analysis (unless stated otherwise all growth rates
are vs. 2022 and in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
(55% of Group) 2023 2022 Reported Constant
----------- --------- -------------- --------------
Q1 145.4 129.7 +12.2% +6.8%
----------- --------- -------------- --------------
* France (14% of Group) +3%
o Page Personnel +3%
o Michael Page +4%
* Germany (13% of Group) +11%
* Benelux +9%
o Belgium +21%
o Netherlands +3%
* Southern Europe +6%
o Italy -2%
o Spain +5%
* Middle East and Africa +20%
Total Headcount at 31 March 2023: 4,081 (31 December 2022: 4,085)
In Europe, Middle East and Africa, gross profit grew 6.8% to
GBP145.4m. EMEA was our strongest performing region, and notably
this performance was achieved despite Q1 2022 being a particularly
tough comparator across the region. France delivered growth of 3%
for the quarter, with similar performances in both Michael Page and
Page Personnel. We also saw consistent performances across both
permanent and temporary recruitment. Germany delivered another
record quarter, up 11%, with the standout performances from Page
Personnel and our Technology focused Interim business. Elsewhere in
the region, we delivered strong results against a tough Q1 2022,
with Belgium, Spain and Turkey delivering record quarters. Having
added 534 fee earners in 2022, we reduced our fee earner headcount
in Q1 2023, down 37 for the region overall.
Americas Gross Profit (GBPm) Growth Rates
(16% of Group) 2023 2022 Reported Constant
---------- ---------- -------------- --------------
Q1 42.7 42.9 -0.7% -7.6%
---------- ---------- -------------- --------------
* North America (10% of Group) -14%
o US -15%
* Latin America (6% of Group) +4%
o Mexico -4%
o Brazil -13%
Total Headcount at 31 March 2023: 1,568 (31 December 2022: 1,690)
In the Americas, we delivered gross profit of GBP42.7m, down
7.6% against Q1 2022. In the US, we declined 15%, compared to
growth of 2% in Q4 2022. The conditions we saw at the end of 2022
continued into Q1, with uncertainty around market conditions
affecting both candidate and client confidence, particularly within
our Technology and Banking disciplines. In Latin America, gross
profit grew 4%, despite macro-economic uncertainty across the
region. Mexico, our largest country in the region, was down 4%,
compared to growth of 1% in Q4, driven by increased delays in
decision making. Brazil was down 13%, however elsewhere in Latin
America, our remaining countries grew 23%, collectively. In line
with the more challenging conditions, overall fee earner headcount
decreased by 134, mainly in the US, Brazil and Mexico.
Asia Pacific Gross Profit (GBPm) Growth Rates
(16% of Group) 2023 2022 Reported Constant
---------- ---------- -------------- --------------
Q1 41.2 48.5 -15.1% -17.0%
---------- ---------- -------------- --------------
* Asia (12% of Group) -21%
* Greater China (4% of Group and 34% of Asia) -42%
o Mainland China -46%
o Hong Kong -36%
* South East Asia -12%
* India flat
* Japan +5%
* Australia +1%
Total Headcount at 31 March 2023: 1,796 (31 December 2022: 1,842)
In Asia Pacific, gross profit for Q1 was down 17.0% against 2022
to GBP41.2m. Permanent recruitment across the region declined 21%,
whilst temporary recruitment grew 12%, reflecting the continued
uncertain market conditions. Greater China declined 42%, with
Mainland China down 46% on Q1 2022, as this region only started to
be impacted by the COVID lockdowns in March 2022. Whilst COVID
restrictions have been lifted, trading remains challenging with
fluctuating levels of COVID infections during the quarter. Hong
Kong declined 36% for the quarter. Our other Large, High Potential
geographic market in the region, South East Asia, declined 12%.
India was flat on Q1 2022, which was a particularly tough
comparator of +79%. Japan delivered growth of 5%, a new record
quarter. Australia grew 1%, broadly in line with Q4. Our fee earner
headcount in the region decreased by 67.
UK Gross Profit (GBPm) Growth Rate
(13% of Group) 2023 2022
---------- ---------- ----------------------
Q1 33.4 36.9 -9.4%
---------- ---------- ----------------------
* Michael Page -14%
* Page Personnel +4%
Total Headcount at 31 March 2023: 1,353 (31 December 2022: 1,404)
In the UK, gross profit for Q1 declined 9.4% against 2022 to
GBP33.4m, following the decline of 1.9% in Q4 2022. We continued to
see clients deferring hiring decisions and candidates cautious
about accepting offers. Reflecting the uncertain market conditions,
clients sought more flexible options, and as such, temporary
recruitment was more resilient than permanent recruitment. In line
with the more challenging trading conditions, our fee earner
headcount reduced by 66 in Q1.
Large, High Potential Markets
Our 5 Large, High Potential geographic markets of Germany,
Greater China, Latin America, South East Asia and the US, which
represented 36% of the Group collectively, declined 9% in Q1.
Excluding Greater China, which was impacted by the ongoing
disruption following the COVID lockdowns and restrictions, as well
as a tough comparator in Q1 2022, these markets declined 1%.
Perm/Temp mix
Gross profit from permanent recruitment decreased 3.1% in
reported rates and declined 7.2% in constant currencies to
GBP195.7m (Q1 2022: GBP202.0m). Gross profit from temporary
recruitment increased 19.5% in reported rates and 14.9% in constant
currencies to GBP67.0m (Q1 2022: GBP56.0m). This resulted in a
ratio of permanent to temporary recruitment of 74:26 (Q1 2022:
78:22).
Headcount
Our fee earner headcount reduced by 304 (-4.4%) during Q1, with
reductions made across all regions albeit more significantly in
markets where we saw the most challenging market conditions. Our
non-operations headcount rose by 82 in Q1, as we continued to
invest in Page Outsourcing and moved our candidate acquisition
teams into our delivery centres. Overall, the Group had 6,639 fee
earners and a total headcount of 8,798. Our total headcount at the
end of Q1 remains 510 (+6.2%) higher than at the end of Q1
2022.
Productivity
Overall, gross profit per fee earner, our measure of
productivity, decreased 8% compared to Q1 2022. We continued to see
the benefits of video interviewing, the investments made in
experienced hires, continued high fee rates as well as wage
inflation. However, reduced candidate and client confidence caused
an increase in time to hire as well as some reluctance to accept
offers, limiting the number of placements per fee earner.
Sustainability
We have just released our 2022 Sustainability report to
highlight the progress we've made towards our four Sustainability
goals over the past 12 months.
This includes:
- changing 135,871 lives
- increasing our proportion of women in leadership roles to
43%
- decreasing our scope 1 & 2 emissions by 30%
- growing our sustainability business by 120%
We are now well on our way to reaching our sustainability goals,
as we strive to support the transition to a more equitable and
greener society.
Read our full report here:
https://www.page.com/sustainability
Foreign Exchange
The Group benefited from positive foreign exchange movements
during Q1, increasing our Q1 reported gross profit by 4.2
percentage points, or GBP10.8m.
Financial Position
Save for the effects of Q1 trading detailed above and the
purchase of shares into the Employee Benefit Trust (EBT) of c.
GBP6m, there have been no other significant changes in the
financial position of the Group since the publication of the
results for the year ended 31 December 2022. Net cash at 31 March
2023 was c. GBP105m (Q4 2022: c. GBP131m, Q1 2022: c. GBP122m).
Shares
At 31 March 2023 there were 328,618,774 Ordinary shares in
issue, of which 14,457,299 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 12,810,128 shares and
consequently these shares should be excluded when calculating
earnings per share. The total number of voting rights in the
Company is 328,618,774.
Cautionary Statement
This First Quarter 2023 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.
The Group will issue its Q2 Results on 12 July 2023.
Enquiries:
PageGroup +44 (0)19 3226 4032
Nicholas Kirk, 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 8.30am today. The live presentation can
be viewed by following the link:
https://www.investis-live.com/pagegroup/641b179e33aa1a1200649ef4/dsfarr
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 24 46 48 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
17 April 2023 at:
https://www.page.com/presentations/year/2023
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