TIDMPAGE
RNS Number : 7089F
PageGroup plc
12 July 2023
12 July 2023
FULL YEAR OUTLOOK IN LINE WITH CONSENSUS
Q2 Highlights*
-- Group gross profit of GBP263.5m, -6.5% vs. 2022 (-6.2% in
reported rates), against a record comparative period
-- Stronger performance in temporary recruitment +11.1%; permanent -11.4%
-- Decrease in fee earner headcount of 255 to 6,385 (Q1 2023: 6,639)
-- Productivity down 4% on Q2 2022; up 6% sequentially on Q1 2023
-- EMEA +1.4%: France flat; Germany +6%
-- Americas -8.8%: US -16%; Latin America +3%
-- Asia Pacific -17.2%: Greater China -32%; SE Asia -22%; Japan -10%; India +5%
-- UK -17.0%: Michael Page -19%; Page Personnel -12%
-- Large, High Potential markets (38% of Group) -10%; excluding Greater China -5%
-- Strong cash position, net cash of c. GBP96m (Q1 2023: c. GBP105m, Q2 2022: c. GBP136m)
-- Full Year operating profit expected to be in line with
company compiled consensus of GBP137.6m
* In constant currencies vs 2022 except where stated
otherwise
Q2 Gross Profit Analysis
Reported (GBPm) Constant
Year-on-year % of Group Q2 2023 Q2 2022 % %
----------- -------- -------- ------- ---------
EMEA 54% 142.3 137.1 +3.9% +1.4%
----------- -------- -------- ------- ---------
Americas 18% 46.3 51.2 -9.6% -8.8%
----------- -------- -------- ------- ---------
Asia Pacific 16% 42.4 53.5 -20.7% -17.2%
----------- -------- -------- ------- ---------
UK 12% 32.5 39.1 -17.0% -17.0%
----------- -------- -------- ------- ---------
Total 100% 263.5 280.9 -6.2% -6.5%
----------- -------- -------- ------- ---------
Permanent 74% 195.5 220.1 -11.2% -11.4%
----------- -------- -------- ------- ---------
Temporary 26% 68.0 60.8 +12.1% +11.1%
----------- -------- -------- ------- ---------
H1 Gross Profit Analysis
Reported (GBPm) Constant
Year-on-year % of Group H1 2023 H1 2022 % %
----------- -------- -------- ------- ---------
EMEA 55% 288.0 266.7 +8.0% +4.1%
----------- -------- -------- ------- ---------
Americas 17% 89.1 94.2 -5.5% -8.2%
----------- -------- -------- ------- ---------
Asia Pacific 16% 83.5 102.0 -18.2% -17.2%
----------- -------- -------- ------- ---------
UK 12% 65.9 76.0 -13.2% -13.2%
----------- -------- -------- ------- ---------
Total 100% 526.5 538.9 -2.3% -4.5%
----------- -------- -------- ------- ---------
Permanent 74% 391.8 422.1 -7.2% -9.2%
----------- -------- -------- ------- ---------
Temporary 26% 134.7 116.8 +15.3% +12.6%
----------- -------- -------- ------- ---------
Nicholas Kirk, Chief Executive Officer, PageGroup, said:
"The Group delivered a good result in the quarter, especially
given the particularly tough Q2 2022 comparator, which is the
Group's record quarter. EMEA performed strongly, however, tough
market conditions affected the performances in Asia, the UK and the
US. Overall, Group gross profit declined 6.5% in constant
currencies against Q2 2022.
"The challenging conditions we saw towards the end of 2022 and
in Q1 2023 continued into Q2, 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
uncertain macro-economic conditions, temporary recruitment
outperformed permanent, as clients sought more flexible options. In
line with these conditions, we reduced our fee earner headcount by
255 (-3.8%) in Q2, following declines in Q1 and Q4 2022, with
reductions in all regions. Our total headcount of 8,572 is now
marginally lower than at the end of Q2 2022. Productivity, measured
as gross profit per fee earner, declined 4%, reflecting the
reduction in gross profit, although this was partially offset by
the decrease in headcount. Compared to Q1 2023, productivity was up
6% sequentially.
"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, as well as
continued high fee rates. We are also seeing the benefits from our
investments in innovation and technology, where Customer Connect is
supporting productivity and enhancing customer experience and Page
Insights is providing real time data to inform business decisions.
We have a highly diversified and adaptable business model, a strong
balance sheet, and our cost base is under continuous review and can
be adjusted rapidly to match market conditions. Given these
fundamental strengths, we believe we will continue to perform well
despite the uncertainty. At this stage of the year, the Board
expects 2023 operating profit to be in line with company compiled
consensus of GBP137.6m."
Geographical Analysis (unless stated otherwise all growth rates
are vs. 2022 and in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
(54% of Group) 2023 2022 Reported Constant
---------- ---------- ------------- -------------
Q2 142.3 137.1 +3.9% +1.4%
---------- ---------- ------------- -------------
H1 288.0 266.7 +8.0% +4.1%
---------- ---------- ------------- -------------
* France (14% of Group) flat
o Page Personnel + 3%
o Michael Page -3%
* Germany (13% of Group) +6%
* Benelux flat
o Belgium +10%
o Netherlands -6%
* Southern Europe flat
o Italy -1%
o Spain -3%
* Middle East and Africa +19%
Total Headcount at 30 June 2023: 4,035 (31 March 2023: 4,081)
In Europe, Middle East and Africa, gross profit grew 1.4% to
GBP142.3m. EMEA was our strongest performing region, delivering
growth against Q2 2022, which was a particularly tough comparator
across the region. France, our largest market in the Group, was
flat for the quarter. We saw stronger performances from Page
Personnel and within temporary recruitment, both of which are
indicative of the current uncertainty in the market. Germany, now
the Group's second largest market, saw growth of 6% for the
quarter, with Page Personnel (+17%) and our Technology focused
Interim business (+19%) continuing to deliver the standout results.
Elsewhere in Europe, we achieved strong results against a
particularly tough comparator. The Middle East and Africa delivered
a record quarter, up 19%, driven by strong performances in the UAE
and South Africa. Having reduced fee earners by 37 in Q1 2023, we
reduced our fee earner headcount further in Q2, down 79 for the
region overall.
Americas Gross Profit (GBPm) Growth Rates
(18% of Group) 2023 2022 Reported Constant
----------- --------- -------------- --------------
Q2 46.3 51.2 -9.6% -8.8%
----------- --------- -------------- --------------
H1 89.1 94.2 -5.5% -8.2%
----------- --------- -------------- --------------
* North America (10% of Group) -16%
o US -16%
* Latin America (8% of Group) +3%
o Mexico -7%
o Brazil -9%
Total Headcount at 30 June 2023: 1,500 (31 March 2023: 1,568)
In the Americas, gross profit was GBP46.3m, down 8.8% against Q2
2022. In the US, gross profit declined 16%, in line with the
reduction we experienced in Q1 2023. The conditions we saw in Q1
continued into Q2, with uncertainty around market conditions
affecting both candidate and client confidence. In Latin America,
gross profit grew 3%, a new record quarter, despite macro-economic
uncertainty across the region. Mexico, our largest country in the
region, was down 7%, compared to a decline of 4% in Q1 and Brazil
was down 9%, an improvement on the decline of 13% in Q1. However,
elsewhere in Latin America, our remaining countries grew 23%,
collectively. In line with the more challenging conditions, overall
fee earner headcount decreased by 84, mainly in the US, Brazil and
Mexico.
Asia Pacific Gross Profit (GBPm) Growth Rates
(16% of Group) 2023 2022 Reported Constant
--------- ----------- ------------- -------------
Q2 42.4 53.5 -20.7% -17.2%
--------- ----------- ------------- -------------
H1 83.5 102.0 -18.2% -17.2%
--------- ----------- ------------- -------------
* Asia (12% of Group) -21%
* Greater China (5% of Group and 37% of Asia) -32%
o Mainland China -37%
o Hong Kong -19%
* South East Asia -22%
* India +5%
* Japan -10%
* Australia -4%
Total Headcount at 30 June 2023: 1,730 (31 March 2023: 1,796)
In Asia Pacific, gross profit for Q2 was down 17.2% against 2022
to GBP42.4m. Permanent recruitment across the region declined 19%,
whilst temporary recruitment declined 5%, reflecting the continued
uncertain market conditions. Greater China declined 32%, with
Mainland China down 37%. Whilst COVID restrictions have been
lifted, trading remained challenging with the recovery continuing
to be slower than anticipated. Hong Kong declined 19% for the
quarter. Our other Large, High Potential geographic market in the
region, South East Asia, declined 22%, due mainly to Singapore
which was impacted by the slowdown in Greater China, as well as a
tough comparator. India continued to deliver strong results, up 5%
on Q2 2022, whereas Japan declined 10%. Australia declined 4%,
despite a strong performance in our Technology discipline. Our fee
earner headcount in the region decreased by 57, mainly in Greater
China.
UK Gross Profit (GBPm) Growth Rate
(12% of Group) 2023 2022
---------- ---------- --------------------
Q2 32.5 39.1 -17.0%
---------- ---------- --------------------
H1 65.9 76.0 -13.2%
---------- ---------- --------------------
* Michael Page -19%
* Page Personnel -12%
Total Headcount at 30 June 2023: 1,307 (31 March 2023: 1,353)
In the UK, gross profit for Q2 declined 17.0% against 2022 to
GBP32.5m, following the decline of 9.4% in Q1. 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 (+6%) was more resilient than permanent recruitment
(-24%). In line with the more challenging trading conditions, our
fee earner headcount reduced by 35 in Q2 and is now 11% lower than
Q2 2022.
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 38% of the Group, collectively, declined 10% in Q2.
Excluding Greater China, which was impacted by the ongoing
disruption following the COVID lockdowns and restrictions, these
markets declined 5%.
Perm/Temp mix
Gross profit from permanent recruitment decreased 11.2% in
reported rates and 11.4% in constant currencies to GBP195.5m (Q2
2022: GBP220.1m). Gross profit from temporary recruitment increased
12.1% in reported rates and 11.1% in constant currencies to
GBP68.0m (Q2 2022: GBP60.8m). This resulted in a ratio of permanent
to temporary recruitment of 74:26 (Q2 2022: 78:22).
Headcount
We reduced our fee earner headcount by 255 (-3.8%) during Q2,
with reductions made across all regions, albeit more significantly
in markets where we saw the most challenging trading conditions.
Our non-operations headcount rose by 29 (+1.3%) in Q2. As reflected
in our continued high fee rates, candidate shortages remained
across most of our markets and as such we continued the move of our
candidate acquisition teams into Delivery Centres. Overall, the
Group had 6,385 fee earners and a total headcount of 8,572.
Productivity
Overall, gross profit per fee earner, our measure of
productivity, decreased 4% compared to Q2 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. Compared
to Q1 2023, productivity was up 6% sequentially.
Foreign Exchange
The Group benefited from positive foreign exchange movements
during Q2, increasing our Q2 reported gross profit by 0.3
percentage points, or GBP1.0m.
Financial Position
Save for the effects of Q2 trading detailed above, the payment
of the 2022 final dividend of GBP33.9m and the purchase of shares
into the Employee Benefit Trust (EBT) of c. GBP11m, there have been
no other significant changes in the financial position of the Group
since the publication of the results for the quarter ended 31 March
2023. Net cash at 30 June 2023 was c. GBP96m (Q1 2023: c. GBP105m,
Q2 2022: c. GBP136m).
Shares
At 30 June 2023 there were 328,618,774 Ordinary shares in issue,
of which 15,235,770 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 13,588,599 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 Second 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 H1 results on 7 August 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/646635a0796b4213005414e0/oioi
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 55 75 58 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
12 July 2023 at:
https://www.page.com/presentations/year/2023
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