REG - PageGroup plc - SECOND QUARTER 2024 TRADING UPDATE
09/07/2024 07:00
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RNS Number : 5855V PageGroup plc 09 July 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
9 July 2024
SECOND QUARTER 2024 TRADING UPDATE
SOFTENING ACTIVITY LEVELS THROUGH THE QUARTER
HOLDING HEADCOUNT IN ADVANCE OF MARKET RECOVERY
Q2 Overview*
· Group gross profit of £224.3m, -12.0% vs. 2023 (-15.0% in reported
rates)
· Exited June -18% vs. 2023
· Softening in activity levels through the quarter
· EMEA -10.2%: France -14%; Germany -9%
· Americas -6.6%: US -19%; Latin America -4%**
· Asia Pacific -19.8%: Greater China -29%; SE Asia -12%; Japan -6%;
India +7%
· UK -17.4%: Michael Page -16%; Page Personnel -20%
· Decrease in fee earner headcount of 153 to 5,598 (Q1 2024: 5,751)
· Productivity up 1% on Q2 2023
· Net cash of c. £56m (Q1 2024: c. £67m, Q2 2023: c. £98m)
Full Year Outlook
· Forward activity KPIs such as new jobs registered and number of
interviews softened during the quarter and candidate and client confidence
remained low. Despite this, we continued to invest in the Group's strategy, by
broadly maintaining our platform of fee earners. Given the weaker than
expected trading in June, recent increased geopolitical and macro-economic
uncertainty and consequently a more cautious view for H2, the Board now
expects full year 2024 operating profit to be in the region of £60m.
* In constant currencies vs 2023 except where stated otherwise
** Excluding Argentina due to hyperinflation
Q2 Gross Profit Analysis
Reported (£m) Constant
Year-on-year % of Group Q2 2024 Q2 2023 % %
EMEA 56% 125.1 142.7 -12.3% -10.2%
Americas 18% 40.1 46.3 -13.5% -6.6%
Asia Pacific 14% 32.3 42.3 -23.7% -19.8%
UK 12% 26.8 32.5 -17.4% -17.4%
Total 100% 224.3 263.8 -15.0% -12.0%
Permanent 74% 165.3 195.9 -15.7% -12.8%
Temporary 26% 59.0 67.9 -13.1% -9.8%
H1 Gross Profit Analysis
Reported (£m) Constant
Year-on-year % of Group H1 2024 H1 2023 % %
EMEA 56% 248.7 288.4 -13.8% -11.4%
Americas 17% 77.4 89.1 -13.0% -6.0%
Asia Pacific 15% 64.4 83.4 -22.8% -17.7%
UK 12% 53.7 65.9 -18.5% -18.5%
Total 100% 444.2 526.8 -15.7% -12.4%
Permanent 73% 325.5 392.2 -17.0% -13.7%
Temporary 27% 118.7 134.6 -11.8% -8.5%
Nicholas Kirk, Chief Executive Officer, PageGroup, said:
"We continued to see challenging market conditions throughout the Group in Q2
and we experienced a softening in activity levels through the quarter,
particularly in terms of new jobs registered and number of interviews. The
conversion of interviews to accepted offers is the most significant area of
challenge, as candidate and client confidence remains subdued, reflecting the
macro-economic uncertainty in the majority of our markets. Permanent
recruitment continues to be impacted more than temporary, as clients seek more
flexible options and permanent candidates remain reluctant to move jobs.
"While we saw a slower end to the quarter, having taken action to reduce
headcount throughout last year, our intention is to broadly hold fee earners
at existing levels to ensure we are well placed to take advantage of
opportunities as sentiment and confidence improve. We have a highly
diversified and adaptable business model, a highly experienced management
team, a strong balance sheet and our cost base is under continuous review.
"We continue to see the benefits of our investments in innovation and
technology. Customer Connect is supporting productivity and enhancing customer
experience, Page Insights is providing real time data to inform business
decisions for both Page and our customers, and we continue to work with our
partners to deploy AI and automation tools into our working environment. Given
the Group's fundamental strengths, we believe we will continue to perform well
despite the challenging environment, and we are confident in our ability to
implement our strategy driving the long-term profitability of the Group."
Trading Summary
Group gross profit declined 12.0% in constant currencies against Q2 2023. We
continued to see tough market conditions in the majority of the Group's
markets with no immediate signs of improvement. As clients' recruitment
budgets have tightened, they have become more risk averse which has slowed the
recruitment process. Although salary levels remain strong, offers made to
candidates were not as elevated as they were in 2022 and early 2023.
We saw a slower end to the quarter with June down 18% on 2023 and a softening
of activity levels through the quarter, particularly in terms of new jobs
registered and number of interviews. Conversion of interviews to accepted
offers remains the most significant challenge due to subdued client and
candidate confidence.
Reflecting the uncertain macro-economic conditions, temporary recruitment
(-9.8%) continued to outperform permanent (-12.8%), as clients sought more
flexible options. We reduced our fee earner headcount by 153 (2.7%) in Q2,
mainly in Europe. As a result of this reduction in headcount, productivity,
measured as gross profit per fee earner, was up 1% versus Q2 2023, despite the
tough macro-economic conditions.
Geographical Analysis (unless stated otherwise all growth rates are vs. 2023
and in constant currency)
EMEA Gross Profit (£m) Growth Rates
(56% of Group) 2024 2023 Reported Constant
Q2 125.1 142.7 -12.3% -10.2%
H1 248.7 288.4 -13.8% -11.4%
· France (14% of Group) -14%
o Page Personnel -14%
o Michael Page -13%
· Germany (13% of Group) -9%
· Benelux -14%
o Belgium -4%
o Netherlands -20%
· Southern Europe -5%
o Italy -13%
o Spain -2%
· Middle East and Africa +7%
Total Headcount at 30 June 2024: 3,715 (31 March 2024: 3,838)
In Europe, Middle East and Africa, Q2 gross profit declined 10.2% against 2023
to £125.1m. France, our largest market in the Group, was down 14%. We saw a
more resilient performance within temporary recruitment, indicative of the
current uncertainty in the market. Germany, the Group's second largest market,
declined 9% in Q2, with our Technology focused Interim business the most
resilient. Elsewhere in Europe, we saw tough market conditions in all
countries. In the Middle East and Africa, gross profit grew 7%, a new record
quarter. We reduced our fee earner headcount in response to the tougher market
conditions in Q2, down 120, mainly in Germany, France and the Netherlands.
Americas Gross Profit (£m) Growth Rates
(18% of Group) 2024 2023 Reported Constant
Q2 40.1 46.3 -13.5% -6.6%
H1 77.4 89.1 -13.0% -6.0%
· North America (10% of Group) -19%
o US -19%
· Latin America (8% of Group) +9%
o Mexico -10%
o Brazil +9%
Total Headcount at 30 June 2024: 1,338 (31 March 2024: 1,363)
In the Americas, gross profit was £40.1m, down 6.6% against Q2 2023. In the
US, gross profit declined 19%. The conditions we saw in Q1 continued into Q2,
with uncertainty around market conditions affecting both candidate and client
confidence. In Latin America, gross profit grew 9%. However excluding
Argentina due to hyperinflation, the region declined 4%. Mexico, our largest
country in the region was down 10%, due to its high level of dependency on the
US. Brazil was up 9%, with a particularly strong performance in temporary
recruitment. Elsewhere in Latin America, our remaining countries declined 8%,
collectively. In line with the more challenging conditions, overall fee earner
headcount decreased by 31.
Asia Pacific Gross Profit (£m) Growth Rates
(14% of Group) 2024 2023 Reported Constant
Q2 32.3 42.3 -23.7% -19.8%
H1 64.4 83.4 -22.8% -17.7%
· Asia (12% of Group) -14%
· Greater China (4% of Group and 31% of Asia) -29%
o Mainland China -25%
o Hong Kong -38%
· South East Asia -12%
· India +7%
· Japan -6%
· Australia -38%
Total Headcount at 30 June 2024: 1,468 (31 March 2024: 1,472)
In Asia Pacific, gross profit for Q2 was down 19.8% against 2023 to £32.3m.
Greater China showed no sign of improvement and declined 29% in Q2, with
Mainland China down 25% and Hong Kong down 38%. South East Asia declined 12%,
due mainly to Singapore, down 16%. India continued to deliver standout
results, with a record Q2, up 7% on the prior year. Japan declined 6%.
Australia declined 38%, with ongoing challenging conditions in all states. Our
fee earner headcount in the region decreased by 9.
UK Gross Profit (£m) Growth Rate
(12% of Group) 2024 2023
Q2 26.8 32.5 -17.4%
H1 53.7 65.9 -18.5%
· Michael Page -16%
· Page Personnel -20%
Total Headcount at 30 June 2024: 1,056 (31 March 2024: 1,105)
In the UK, gross profit for Q2 declined 17.4% against 2023 to £26.8m,
following the decline of 19.2% in Q1. We continued to see clients deferring
hiring decisions and candidates cautious about accepting offers. Permanent
recruitment (-16%) was more resilient than temporary recruitment (-21%), due
partially to a softer comparator for permanent. Following headcount decreases
over the past 18 months, we held our fee earner headcount broadly flat (+7) in
Q2.
Perm/Temp mix
Gross profit from permanent recruitment decreased 15.7% in reported rates and
12.8% in constant currencies to £165.3m (Q2 2023: £195.9m). Gross profit
from temporary recruitment decreased 13.1% in reported rates and 9.8% in
constant currencies to £59.0m (Q2 2023: £67.9m). This resulted in a ratio of
permanent to temporary recruitment of 74:26, consistent with the prior year.
Headcount
We reduced our fee earner headcount by 153 (-2.7%) during Q2, mainly in
Europe. Following these decreases, our intention remains to hold fee earner
headcount broadly at existing levels. Our non-operations headcount decreased
by 49 (-2.4%) in Q2 due to finalising the closure of our UK SSC. Overall, the
Group had 5,598 fee earners and a total headcount of 7,576.
Foreign Exchange
Foreign exchange movements had a negative impact on the Group's results in Q2,
decreasing our reported gross profit by 3.0 percentage points, or £7.9m.
Financial Position
Save for the effects of Q2 trading detailed above, the payment of the 2023
final dividend of £35.2m and the purchase of shares into the Employee Benefit
Trust (EBT) of c. £9m, there have been no other significant changes in the
financial position of the Group since the publication of the results for the
quarter ended 31 March 2024. Net cash at 30 June 2024 was c. £56m (Q1 2024:
c. £67m, Q2 2023: c. £98m).
Shares
At 30 June 2024 there were 328,618,774 Ordinary shares in issue, of which
16,720,972 were held by the Employee Benefit Trust (EBT). The rights to
receive dividends and to exercise voting rights have been waived by the EBT
over 15,312,185 shares and consequently these shares should be excluded when
calculating earnings per share. The total number of voting rights in the
Company is 328,618,774.
Cautionary Statement
This Second Quarter 2024 Trading Update has been prepared solely to provide
additional information to shareholders to assess the Group's strategies and
the potential for those strategies to succeed. The Trading Update should not
be relied on by any other party or for any other purpose. This Trading Update
contains certain forward-looking statements. These statements are made by the
Directors in good faith based on the information available to them up to the
time of their approval of this Trading Update and such statements should be
treated with caution due to the inherent uncertainties, including both
economic and business risk factors, underlying any such forward-looking
information. This Trading Update has been prepared for the Group as a whole
and therefore gives greater emphasis to those matters that are significant to
PageGroup and its subsidiary undertakings when viewed as a whole.
The Group will issue its H1 results on 8 August 2024.
Enquiries:
PageGroup +44 (0)19 3226 4032
Nicholas Kirk, Chief Executive Officer
Kelvin Stagg, Chief Financial Officer
FTI Consulting +44 (0)20 3727 1340
Richard Mountain / Susanne Yule
The Company will host a conference call and presentation for analysts and
investors at 9.00am today. The live presentation can be viewed by following
the link:
https://www.investis-live.com/pagegroup/6655a3e770818213009e87f8/gewq
(https://www.investis-live.com/pagegroup/6655a3e770818213009e87f8/gewq)
Please use the following dial-in numbers to join the conference:
United Kingdom (Local) 020 3936 2999
All other locations +44 20 3936 2999
Please quote participant access code 97 67 50 to gain access to the call.
A presentation and recording to accompany the call will be posted on the
Company's website during the course of the morning of 9 July 2024 at:
https://www.page.com/presentations/year/2024
(https://www.page.com/presentations/year/2024)
This announcement contains information which is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No.596/2014 as it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement via the
Regulatory Information Service, the inside information is now considered to be
in the public domain.
The person responsible for arranging the release of this announcement on
behalf of the Company is Kelvin Stagg, Chief Financial Officer.
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