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PageGroup release Q2 & first half 2014 trading update

Q2 GROSS PROFIT ANALYSIS

 

Reported (&poundm)

Constant

Year-on-year

% of Group

Q2 2014

Q2 2013

%

%

EMEA

40%

54.8

55.0

-0.5%

5.0%

UK

25%

34.8

31.3

11.1%

11.1%

Asia Pacific

21%

28.3

28.2

0.6%

14.2%

Americas

14%

19.3

20.6

-6.6%

8.7%

Total

100%

137.2

135.1

1.5%

8.9%

 

 

 

Permanent

77%

106.1

104.7

1.3%

9.4%

Temporary

23%

31.1

30.4

2.4%

7.4%

H1 GROSS PROFIT ANALYSIS

 

Reported (&poundm)

Constant

Year-on-year

% of Group

H1 2014

H1 2013

%

%

EMEA

41%

107.4

107.1

0.3%

5.2%

UK

26%

67.6

61.4

10.1%

10.1%

Asia Pacific

19%

51.3

54.3

-5.5%

7.8%

Americas

14%

37.4

39.1

-4.4%

11.8%

Total

100%

263.7

261.9

0.7%

7.9%

 

 

 

Permanent

77%

203.7

202.6

0.5%

8.4%

Temporary

23%

60.0

59.3

1.2%

6.1%

Steve Ingham, chief executive officer, said, "PageGroup delivered an increase of 8.9% in year-on-year growth in constant currencies for Q2, with improvement in all four regions.  We saw solid performances across our regions, including strong growth in the major economies of China, the UK and the US. While adverse FX continues to be a drag on the reported results, overall the underlying business environment is gradually improving in a number of our key markets.  In reported rates, the Group gross profit was up 2% on the prior year to &pound137.2m and up over 8% sequentially from &pound126.6m in Q1 2014.

"In our largest region, EMEA, both France and Germany saw modest constant currency growth over the prior year, and our Southern European markets performed strongly. The UK grew at over 11% for the quarter reflecting increasing momentum in the business, especially in technical disciplines and in Finance & Accounting, although Financial Services remained flat. Asia had an exceptional quarter, delivering 25% growth on the prior year, including China up 37% to record levels.  Australia continued to stabilise, with Q2 4% down on the prior year versus down 10% in Q1.  The Americas region grew 9% in the quarter, helped by the US being up 17% against tougher comparators.  Latin America (LatAm) grew 4%, despite Brazil declining 7% as the World Cup impacted activity levels, with the other 5 countries up 24% collectively.

"We are seeing more instances of candidate shortages in a number of markets and disciplines. This gives us confidence to continue our investment programme, both in infrastructure and, selectively, additional fee earners.  As a result, we increased headcount by 72 consultants (2%) during the second quarter and over 175 for the first half.  Support staff headcount accounted for only 15% of total headcount growth over the same period.  We will continue this investment in people and infrastructure as long as we continue to see the right market conditions.

"Our infrastructure programme, such as the upgraded website roll-out, which will make a significant contribution to candidate acquisition in an increasing number of countries, is progressing well.  The roll-out of our new Page Recruiting System continued to four more of our US offices and in Q3 we expect this to continue with further roll-outs in the US and UK. We are confident that such investment puts us in the best position to take advantage of improving market conditions, as they occur.  Likewise, our focus on developing scale and breadth in under-penetrated markets, and in regions such as LatAm and Asia where we lead the market, is delivering significant competitive advantage. 

"We have seen an improvement in the performance of all our regions over the last six months in constant currency, despite challenging economic conditions in some of our larger countries.  Looking ahead, we expect to see market conditions remaining variable in Brazil and France and for Australia to become increasingly stable.  The more positive environment in many of our other countries, both large and small, is expected to continue, with our leading KPIs positive as we start the second half.  For the full year, if the current trend of improving growth rates is maintained, we continue to expect to perform in line with our expectations as outlined at the time of the first quarter results."

Joshua Raymond, chief market strategist of cityindex.co.uk, commented, “Michael Page shares jumped 2% in trading on Tuesday after the recruitment firm reported a near 9% jump in profits to &pound137.2mn for its fiscal second quarter.

“The pleasing part about their numbers is the fact that the good news is seemingly well diversified across its four key regions, with growth in each region helping the firm to maintain guidance on its full year profits target of &pound538.5mn. Record growth in China, a potentially very lucrative market for the firm hit record growth in the quarter also, giving the firm confidence to open offices in Indonesia and Thailand. All in all, it’s a very solid set of numbers and the market has enjoyed them.”

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