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UK – Michael Page profits slip after tough second half

05 March 2013

Professional recruiter Michael Page (MPI:LSE) saw profits slide in 2012 as trading became more challenging in the last six months of the year and business confidence deteriorated, the firm reported on Tuesday.

Michael Page, among the 25-largest staffing firms in the world, reported a -2.9% fall in revenue although at constant currency sales grew slightly by +0.3% to £989.9 million. Gross profit in the year was down -4.9% (-1.5% at constant currency) to £526.9 million. Operating profit fell -33.4% to £57.3 million. Profit after tax was £36.2 million, a decline of -36.3% from a year ago.

During the year, the firm took restructuring costs of £7.8 million, relating to changes in management structure where an entire layer of management was removed.

In 2012, the firm’s temporary placement business fared better than the permanent placement business. Revenue from temporary placements for the year grew by +3.3% at constant currency to £567.9 million, compared to a -3.4% decline for permanent placements. Gross profit from temporary placements grew by +5% at constant currency while gross profit from permanent placements fell by -3% at constant currency.

Looking ahead, chief executive of the Group, Steve Ingham, said: “Although we anticipate another challenging year in 2013, we expect to see improvement in some markets as the year progresses. We remain financially strong, with net cash of £61.4 million at the year end. While the strength of any recovery is uncertain, we believe that we are well positioned to take advantage of any recovery and to respond to improvements in market conditions in 2013.”

Regional performance mixed

In Europe, Middle East and Africa (EMEA), the firm’s largest region, revenue fell by -4.3% to £403.2 million, but increased by +2.2% at constant currency. Gross profit was down -8.8% (-2.8% at constant currency) to £218.4 million. 

The recruiter said that market conditions in continental Europe worsened during the year as clients became more reluctant to hire staff. In France and Germany, gross profit was down due to the firm’s strong exposure to permanent recruitment while the temporary businesses grew. Spain, Italy, Switzerland and the Netherlands saw similar scenarios.  

In the UK, revenue fell by -8.9% to £295.9 million and gross profit was down -6.6% to £121.4 million.  The mix of permanent and temporary gross profit and their gross profit margins remained largely flat. The firm saw strong growth from technical disciplines although overall clients remained cautious.

In Asia Pacific, revenue rose +15.7% (+14.6% at constant currency) to £192.2 million while gross profit was up +11.1% (+9.8% at constant currency) to £114.9 million. All countries in the region showed growth during 2012 with gross profit rising +3%  in Australia and New Zealand while Asia posted +17% increase in gross profit.

In early trading, the company’s share price was up +3% to 450 pence, down -6% from a year ago and -11% below its 52-week high of 505 pence. Based on its stock price, the firm has a market value of £1.33 billion. 

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