International specialist recruitment firm PageGroup (MPI: LSE) reported a record group gross profit for the third quarter ending 30 September 2019 of £216.7 million, an increase of 2.1% in constant currency when compared to last year. However, the company said the majority of the group's regions were impacted by increased macro-economic and political uncertainty in Q3.

Steve Ingham, Chief Executive Officer, commented, “Given these heightened political and macro-economic challenges, together with our limited forward visibility, we currently expect 2019 operating profit to be in the range of £140 million to £150 million,” Ingham said.

In 2018, PageGroup's operating profit was £142.5 million and earlier market estimates had 2019 forecast between £156.5 million and £168 million.

Gross profit for the third quarter by region and recruitment type was broken down as follows.

Gross profit by discipline

All growth rates below are in constant currency unless otherwise noted.

EMEA Q3 growth slowed when compared to Q2 as increased economic uncertainty impacted market confidence across the region. Growth was faster in Michael Page, up 9% compared to 2% in Page Personnel. 

France, representing 15% of the group, slowed to 2%, from 6% in Q2 2019. Germany, despite weaker macro-economic data, maintained strong growth, up 16%, with the group’s Interim business, mainly focused on Technology, growing 28%. Italy improved slightly on its Q2 growth rate of 7%, delivering growth of 11% and Spain grew 3%, in line with Q2. Benelux slowed from 13% in Q2 to 7%. The Middle East and Africa declined 10%, with particularly tough conditions in South Africa. 

Within Asia Pacific, Greater China, one of the company’s Large, High Potential markets, declined 24%, against a tough comparator of 31%. Trade tariff uncertainty continued to impact Mainland China, particularly among PageGroup’s larger international clients, while the increased social unrest affected the group’s Hong Kong business.

South East Asia, another of the Large, High Potential markets, grew 11%, with growth in some of the newer countries, partially offset by a 4% decline in Singapore, which was affected by the wider trade tariff concerns. Japan grew 5%, down from 13% in Q2, with weaker growth from multinational clients. India, now with over 150 fee earners, delivered another record quarter, up 23%. Australia grew 2%, with strong growth in Victoria offset by more challenging trading in New South Wales.

The Americas, PageGroup’s fastest growing region, grew 13.0% to £37.3 million. The US delivered growth of 14%. Growth was strongest in the offices outside of New York, which was impacted by a slowing in Financial Services. 

Latin America grew 17%, delivering another record quarter for the region. Mexico, the largest country in Latin America, grew 13%, while the Brazilian business continued to perform well, growing 25%. Elsewhere, the other four countries in the region grew 15% collectively, with record performances from Argentina, Colombia and Peru, partially offset by more challenging conditions in Chile.

The UK declined 4.1%, with heightened Brexit related uncertainty now impacting candidate and client confidence at all levels. This was reflected by Page Personnel, which represents a quarter of the UK market, and Michael Page, which is focused on more senior opportunities, both declining by 4%.

Steve Ingham commented, "Looking ahead, the deterioration in trading conditions seen during Q3 across the majority of our regions is anticipated to continue.”

“In the UK, heightened Brexit related uncertainty is expected to remain as we approach and go beyond 31 October,” Ingham said. “With worsening macro-economic indicators in Continental Europe, particularly in Germany, and in the US, there are signs that growth in these markets may slow. In Greater China, confidence in Mainland China continues to be affected by trade tariff uncertainty and the social unrest in Hong Kong is increasing.”

Rival Robert Walters also published a trading update today in which it warned of flat profit for the full year, citing political uncertainties in several markets.

Pagegroup set a new 52-week low during today's trading session when it reached £356.00. Over this period, the share price is down -31.41%. As of last trade it reached £373.80, down 10.49% on the day. Based on its current share price the company has a market value of £1.37 billion.