Daily NewsView All News
Michael Page International Plc (MPI:LSE), the professional recruitment specialist and 11th largest staffing company in Europe, has today published a trading update on the second quarter and first six months of 2010.
Group gross profits were up by +33.1% from 83.8 million Pounds in Q2 2009 to 111.5 million Pounds in Q2 2010, ahead of market consensus. In constant currency, group Q2 gross profits were up by +29.8%, year-on-year.
Compared to Q1 2010, group gross profits were up by +14% or +13.6 million Pounds in Q2 2010. In constant currency group Q2 gross profits were up by +13.9%, quarter-on-quarter.
In the UK (29% of group), gross profits were up by +14.4% from 28.1 million Pounds in Q2 2009 to 32.2 million Pounds in Q2 2010. Quarter-on-quarter, UK gross profits were up by +11% or +3.2 million Pounds. Excluding central and local government sectors, which account for less than 10% of the group's UK business, market conditions elsewhere continued to improve during the quarter, with the strongest sequential growth being in Financial Services, Sales, Retail, Human Resources and Legal.
In the EMEA region (42% of group), gross profits were up by +22.4% from 38.2 million Pounds in Q2 2009 to 46.7 million Pounds in Q2 2010. Quarter-on-quarter, EMEA gross profits were up by +4.8% or +2.1 million Pounds. In constant currency EMEA gross profits were up by +25%, year-on-year and by +7.7%, quarter-on-quarter.
Within the EMEA region, gross profits at constant rates of exchange in:
France (16% of the Group) were higher by +26% in Q2 (+7% higher than Q1 2010).
Germany (5% of the Group) were higher by +17% in Q2 (+3% higher than Q1 2010).
Italy (4% of the Group) were higher by +46% in Q2 (+14% higher than Q1 2010).
Spain (3% of the Group) were higher by +27% in Q2 (+3% higher than Q1 2010).
Austria, Belgium, Ireland, Luxembourg, Poland, Portugal, Russia, South Africa, Sweden, Switzerland, Turkey, U.A.E. (10% of the Group) were higher by +66% in Q2 (+16% higher than Q1 2010).
Group gross profits generated from permanent placements (79% of group), were up by +51.5% from 58 million Pounds in Q2 2009 to 87.9 million Pounds in Q2 2010. Quarter-on-quarter, gross profits generated from permanent placements were up by +17.3% or by +12 million Pounds. In constant currency, gross profits generated from permanent placements were up by +47%, year-on-year and up by +16.9%, quarter-on-quarter.
Group gross profits generated from temporary placements (21% of group), were down by -8.3% from 25.8 million Pounds in Q2 2009 to 23.6 million Pounds in Q2 2010. Quarter-on-quarter, gross profits generated from temporary placements were up by +3.2% or by +0.7 million Pounds. In constant currency, gross profits generated from temporary placements were down by -9.1%, year-on-year but up by +4%, quarter-on-quarter.
An agreement has been signed with Her Majesty's Revenue and Customs (HMRC) for Michael Page International to retain 28.5 million Pounds (net of fees) in respect of reclaimed VAT and interest thereon. As a result, the group returned to HMRC approximately 12 million Pounds of the 50 million Pounds it originally received in 2009. The reclaimed VAT and interest thereon will be recorded as non-recurring income totalling 28.5 million Pounds in the group's 2010 income statement. There has been no further progress on the amended claims for a further refund of VAT and related interest.
Steve Ingham, Chief Executive, said "we achieved a strong performance in the second quarter, with gross profit of 111.5 million Pounds, up 14% sequentially on the first quarter of 2010 and 33% higher than the second quarter of 2009. The improvement in our performance has been driven by greater permanent recruitment activity as confidence levels improve, leading to higher rates of job churn."
"We are benefiting from our investment in diversifying the group internationally, with over 70% of our gross profit now derived from areas outside of the UK and over 40% of our fee earners in the faster developing recruitment markets. We have strong market-leading positions in specialist recruitment in Asia and Latin America and are particularly optimistic about our prospects in these regions where we will continue to invest in additional headcount. In the UK, Continental Europe and North America we have experienced job flow improvements in virtually all markets."
"It is the nature of our business that visibility is short, and the general level of business confidence and economic activity may be threatened by fiscal consolidation in the UK and Europe, however, we are quick to react to changing market conditions. Having maintained our presence in all our markets, the strength of our geographic discipline and industry sector diversification, combined with our operational gearing means that our profitability is much improved over last year."
Group headcount increased by 201 people during the quarter (+5.5%) to 3,860 at the end of June, 158 (+4.3%) higher than the headcount at the end of June 2009.
The Q2 results are given the headline, 'Benefiting from Diversification' and certainly Michael Page's geographical mix and relatively low exposure to the weak UK public sector should put the group in a more stable position compared to many of its rivals. However, with only 21% of gross profit derived from temporary provision, the group will have a more limited benefit from any improvement in demand for temporary staffing compared to peers.