(A version of an email subject line showed an incorrect figure for gross profit. The correct figure is a decline of 12.8%) 

PageGroup plc announced that gross profit fell 12.8% to £219.7 million (US$277.8 million) on a constant currency basis. The slowdown PageGroup saw at the end of the fourth quarter of 2023 continued into first quarter, with some deterioration experienced, particularly within Continental Europe.

Trading conditions in Asia, the UK and the US saw no improvement, with low levels of client and candidate confidence continuing to delay time to hire, particularly in permanent recruitment.

“Overall, activity levels remain strong. However, we experienced a slight deterioration in job flow towards the end of the quarter,” PageGroup CEO Nicholas Kirk said. “Conversion of final interviews to accepted offers is still the most significant challenge, as candidate and client sentiment remains subdued, reflecting the general macroeconomic uncertainty in most of our markets. Permanent recruitment was more impacted than temporary across all of our markets as clients continue to seek more flexible options.”

PageGroup added that clients have become more risk averse as their recruitment budgets have tightened, which has slowed the recruitment process. Although salary levels remain strong, offers made to candidates were not as elevated as they were in 2022 and early 2023.

When it comes to the group’s perm/temp mix, overall gross profit from permanent recruitment decreased 18.6% in reported rates and 14.9% in constant currency. Gross profit from temporary recruitment decreased 9.9% in reported rates and 6.7% in constant currency. This resulted in a ratio of permanent to temporary recruitment gross profit of 73:27 (Q1 2023: 74:26).

Group fee-earner headcount reduced by 100 (-1.7%) during Q1, which was slower than the reductions made in 2023. The group had already shed 224, or 3.7%, of its fee-earning roles and 57 back-office jobs in the final quarter 2023. Overall, the group now has 5,751 fee earners and a total headcount of 7,778.

Geographical analysis (in constant currency)

In Europe, Middle East and Africa, gross profit declined 12.7% to £123.3 million. The tougher conditions PageGroup saw at the end of 2023 continued into the first quarter of this year. Reflecting this uncertainty, temporary recruitment was more resilient than permanent.

Gross profit in France declined 16% for the quarter, with similar performances in both Michael Page and Page Personnel. This was a marked slowdown from the decline of 5% in the fourth quarter of 2023.

Germany declined 16%, compared to a decrease of 6% in the fourth quarter of 2023. Tougher conditions were experienced in permanent recruitment, down 23%, while the group’s technology focused interim business was more resilient, down 8%. The company also reduced its fee-earner headcount in the first quarter by 46.

In the Americas, PageGroup delivered gross profit of £37.3 million (US$47.2 million), down 5.5% year over year. In the US, group gross profit declined 15%, an improvement on the fourth quarter of 2023, although this was due partially to a softer comparator. The conditions the group saw at the end of 2023 continued into first quarter of this year, with uncertainty around market conditions affecting both candidate and client confidence, particularly within accounting and financial services.

In Latin America, gross profit grew 9%, despite macroeconomic uncertainty across the region. This was also partially due to hyperinflation in Argentina following the election. Excluding Argentina, the region declined 4%. Mexico, the group’s largest country in the region, was down 12%, compared to a decrease of 6% in the fourth quarter of 2023. Brazil was up 10%; however, elsewhere in Latin America, PageGroup’s remaining countries declined 6% collectively. Fee-earner headcount in the region increased by 37.

In Asia Pacific, gross profit for the first quarter was down 15.7% against 2023. Greater China declined 15%, with Mainland China down 19% and Hong Kong down 12% for the quarter. This was a worsening from the performance in the fourth quarter of 2023 due to a further reduction in headcount of approximately 30 in the first quarter. 

Southeast Asia gross profit declined 3% with Singapore returning to growth in the first quarter. India reported a record first quarter, up 13%. Japan experienced tougher conditions during the quarter, declining 26%. Australia declined 32% with tough conditions in all states. The group’s fee-earner headcount in the region decreased by 65, mainly in Australia and Greater China.

In the UK, Q1 gross profit declined 19.2%. PageGroup continued to see clients deferring hiring decisions and candidates cautious about accepting offers. Temporary recruitment (down 12%) was more resilient than permanent recruitment (down 22%). In line with the more challenging trading conditions, the group’s fee earner headcount reduced by 26 in first quarter and at the end of the quarter was 17% lower than a year ago.

Kirk said, “While we anticipate a period of low confidence levels, based on our current outlook, we intend to hold fee-earner headcount broadly at existing levels to ensure we are well placed to take advantage of opportunities as sentiment and confidence improve. 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.”

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Share price

Shares in PageGroup closed down 9.13% in London today to £440.00 (US$548.99). They were 12.44% below their 52-week high.