UK-based specialist recruitment firm PageGroup (MPI: LSE) reported a record group gross profit for the second quarter ending 30 June 2019 of £224.6 million, an increase of 7.4% in constant currency when compared to last year.

International growth offset weakness in the UK during the second quarter as continued Brexit-related uncertainty impacted candidate and client confidence. 

Kelvin Stagg, Chief Financial Officer, commented, “It is clear that macro-economic conditions in a number of our regions are becoming more challenging, and, as such, we currently expect 2019 operating profit to be towards the lower end of the range of current market forecasts.” PageGroup’s second quarter was a record quarter for the group with 16 countries growing gross profit over 10%.

In constant currency, Michael Page grew 6.2%, with Page Personnel growing faster, up 10.3% in the quarter.

Gross profit for the second quarter by region was broken down as follows.

All growth noted below is in constant currency.

EMEA saw a record high in the second quarter. Both Michael Page and Page Personnel reported growth of 8% and 10%, respectively.

France, representing 16% of the group, achieved a record quarter, growing 6% in constant currency. Germany also reported a record quarter, up 24%. Italy grew 7% and Spain was up 3%, both impacted by slower economies. Benelux grew 13%, with Belgium delivering a record quarter. The Middle East and Africa grew 4%, with the UAE impacted by a tough comparator.

In Asia Pacific, Greater China, one of the group’s large, high potential markets declined 1%, due to the continuing impact of trade tariff uncertainty in Mainland China, particularly affecting the group’s larger international clients, and more recently, social unrest in Hong Kong.

South East Asia grew 8%, with strong growth in Indonesia and Thailand, offset by a 3% decline in Singapore, which was affected by wider trade tariff concerns. Japan grew 13%, a record quarter. India, now with over 140 fee earners, delivered another record quarter, up 52%. Australia grew 4%, with strong growth in Victoria offset by more challenging trading in New South Wales.

Within the Americas, PageGroup’s fastest-growing region, the US delivered a record quarter, up 22%. Latin America grew 15%, delivering another record quarter for the region. Mexico, the largest country in the region, grew 30%, a record quarter. The Brazilian market continued to perform well, growing 9%. Elsewhere, the other four countries in the region grew 9% collectively, with record performances from Argentina and Peru.

The UK, now 16% of group gross profit, declined 2.4%, with continued Brexit related uncertainty impacting candidate and client confidence. Page Personnel, which represents a quarter of the UK, grew 8%. Michael Page, which is focused on more senior opportunities and continued to be impacted to a greater extent by the uncertainty, declined 6%.

Stagg commented, “Fee earner headcount fell in markets where we saw more challenging conditions, such as France, Greater China and the UK. We continued to invest in markets where we saw the greatest growth, such as the US and India, but we are mindful of the weaker macro-economic conditions seen in much of Continental Europe. Our flexible business model enables us to react quickly to changes in market conditions by adjusting our headcount to focus on productivity and conversion.”

Gross profit broken down by recruitment type was as follows for the second quarter.

Permanent recruitment made up 76% of group gross profit while Temporary made up 24% during the quarter.

 Stagg said it is “clear that macro-economic conditions in a number of our regions are becoming more challenging” and as a result the company expects operating profit to be at the lower end of analysts’ estimates of £156.5 million to £168.0 million, compared to £142.5 million in 2018”.Nervous investors took more notice of the uncertainty over the remainder of the year than the record results. As of last trade PageGroup traded at £430.00, down 14.85% on the day and 1.37% above its 52-week low of £424.20, set on 15 January 2019. Based on its current share price the company has a market value of £1.66 billion.