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UK – Michael Page gross profit drops in Q1

16 April 2013

Professional recruiter Michael Page International (MPI:LSE) saw gross profit fall -6.7% to £126.8 million in the first quarter of the year, following tough trading conditions across France and Germany. But in Asia and North America the firm posted double-digit growth.

Chief executive Steve Ingham spoke of robust results. “We saw good performances in some of our regions, with Asia and North America delivering the strongest gross profit performances up 14% and 16% respectively year-on-year in constant currency.

“Our offices in Greater China, Japan, Mexico, the Middle East, and the USA performed particularly well, as did some of our smaller, newer businesses in Europe, Latin America and Asia. However, our businesses in France and Germany, where we operate predominantly in permanent recruitment, experienced another challenging quarter, down 17% and 27% respectively against strong comparables year-on-year in constant currency.”

The recruiter now expects the second quarter to be challenging. “We continue to actively adjust our cost base, both to take account of market conditions and also to improve the group's operating performance,” said Mr Ingham.

Gross profit contracted -3.6% in the temporary staffing business to £28.5 million while the firm saw a stronger decline of -7.6% in its permanent business where gross profit dropped to £98.3 million. Gross profit also declined across a number of disciplines, particularly in finance/accounting, marketing/sales/retail and legal/technology/HR.

In the largest region, Europe, Middle East and Africa (EMEA), market conditions remained challenging in the three months to March. Gross profit fell year-on-year by -15.1% to £52.0 million. While France and Germany lagged behind, the firm reported good performances in Rest of Africa, Russia, Sweden, Turkey and the UAE. Trading also improved in Southern Europe, particularly in Spain.

In the UK, gross profit fell at annual rate of -1.2% to £30.2 million. “Our continued diversification and the depth of management experience continues to underpin our robust performance in the UK, in what are difficult market conditions,” the company said. Trading remained strong in divisions such as property & construction, engineering, digital, energy and public sector businesses.

During the quarter, gross profit in Asia Pacific was £26.1 million, a slight year-on-year decline of -0.3%. A slowdown in the Australian mining and resources sector impacted the firm’s financial performance. But prospects were brighter in Japan and Greater China.  

In the Americas, gross profit grew by +2.2% year-on-year to £18.5 million despite a slowdown in Brazil and Argentina.

The firm’s share price fell by over -3% in early trading this morning to 385 pence, down -11% from a year ago. Based on its stock price, Michael Page has a market value of £1.22 billion. 

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