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Michael Page confirm 11% gross profit growth in Q1 results

Q1 GROSS PROFIT ANALYSIS

 

Reported (&poundm)

Constant

Year-on-year

% of Group

Q1 2015

Q1 2014

%

%

EMEA

40%

54.0

52.7

2.6%

12.1%

UK

27%

36.5

32.8

11.3%

11.3%

Asia Pacific

19%

25.8

23.0

12.3%

10.8%

Americas

14%

19.3

18.1

6.7%

7.1%

Total

100%

135.6

126.6

7.2%

10.9%

 

 

 

Permanent

77%

105.1

97.7

7.6%

10.9%

Temporary

23%

30.5

28.9

5.8%

11.0%

Steve Ingham, chief executive officer, said, "The 10.9% increase in the Group's gross profit in constant currencies for the first quarter reflects continued year-on-year growth in all four regions. Our three largest regions of EMEA, UK and Asia Pacific all saw stable growth rates compared to those in the fourth quarter. The Americas grew 7% year-on-year, but this growth rate moderated sequentially due to demanding comparatives in the US and worsening conditions in Brazil. However, Latin America excluding Brazil saw improving growth rates in all other countries, particularly Mexico, Colombia and Argentina. In total, 23 countries achieved growth of over 10%.

"In reported rates, first quarter gross profit was up 7.2% to &pound135.6m. As expected, we were impacted by foreign exchange movements which lowered our reported figure by 3.7 percentage points, equivalent to &pound4.8m of gross profit.

"Having added 468 fee earners in 2014, net fee earner additions slowed in the first quarter to 65 as we continued to focus on improving conversion rates. Fee earners will be added selectively during the year in those regions where market conditions support investment.

"We are pleased with our performance in the first quarter and, as we look ahead, we expect to see similar trends in market conditions prevailing across our major regions. Sterling remains strong and this continues to impact our results. We remain focused on productivity and we continue to expect our reported Group conversion rate to improve at a similar rate of growth as that seen over the past couple of years. This early in the year, and with the level of visibility we have, the Board continues to believe the performance for the year will be in line with its expectations."

The Group will issue its Second Quarter Trading Update on 14 July 2015.

Group Trading Update

Michael Page International plc ("PageGroup") delivered first quarter gross profit of &pound135.6m, up 7% in reported rates and up 11% in constant currencies, with growth in all four regions. As indicated in our full year results presentation in March, the FX impact on our results in 2015 is expected to be significant.

Ongoing Investment

Having added 468 fee earners in 2014, we slowed our investment in fee earners to 65 in the first quarter. Total headcount increased by 102 in the quarter to 5,680, with some temporary additions in operational support staff to progress key strategic projects, such as the new system roll-out in Europe and some overlap as support activities are standardised and consolidated within regions.

Perm/Temp mix

Group gross profit from permanent recruitment grew 8% to &pound105.1m (Q1 2014: &pound97.7m) temporary recruitment grew 6% to &pound30.5m (Q1 2014: &pound28.9m). This resulted in a ratio of permanent to temporary recruitment of 77:23. In constant currencies, both permanent and temporary recruitment were up 11%.

Discipline analysis

 

Reported (&poundm)

Constant

Year-on-year gross profit

% of Group

Q1 2015

Q1 2014

%

%

Finance & Accounting

40%

54.3

49.3

10.0%

13.8%

Legal, Technology, HR, Secretarial, Healthcare

20%

27.8

25.7

8.3%

11.5%

Engineering, Property & Construction, Procurement & Supply Chain

20%

26.5

26.0

2.2%

6.5%

Marketing, Sales & Retail

20%

27.0

25.6

5.6%

9.3%

Total

100%

135.6

126.6

7.2%

10.9%

Geographical analysis (unless otherwise stated all growth rates are in constant currency)

EMEA

Gross Profit (&poundm)

Growth Rates

(40% of Group)

 

Reported

Constant

Q1 2015 vs. Q1 2014

54.0

52.7

2.6%

12.1%

Headcount at 31 March 2015: 2,162 (31 December 2014: 2,113)

Gross profit growth in constant currencies:

&middot    France (13% of Group) 5% on Q1 2014

&middot    Germany (6% of Group) 17% on Q1 2014

Compared to the prior year, EMEA was up 12% and in line with our Q4 growth rate. France was up 5%, with Michael Page up 10%, ahead of Page Personnel up 2%. In Germany, gross profit growth increased to 17%, compared to 14% in the last quarter, with Page Personnel up 29%. Holland, Switzerland, Poland and Southern Europe grew strongly, with the Middle East, despite the fall in the oil price and ongoing political instability, up 9% with a record quarter in the UAE. Fee earner headcount grew by 24 across the region.

UK

Gross Profit (&poundm)

Growth Rates

(27% of Group)

 

Q1 2015 vs. Q1 2014

36.5

32.8

11.3%

Headcount at 31 March 2015: 1,463 (31 December 2014: 1,441)

The UK gross profit growth rate remained similar to the previous quarter at 11%. There was a notable performance from the Northern region, and Page Personnel again performed strongly, up 25%. Within Michael Page, our Finance & Accounting, Engineering and Property & Construction businesses all performed well. Fee earner headcount grew by 15 in the quarter. The mix (87:13) and growth rates of Private and Public Sector remained in line with the last few quarters.

Asia Pacific

Gross Profit (&poundm)

Growth Rates

(19% of Group)

 

Reported

Constant

Q1 2015 vs. Q1 2014

25.8

23.0

12.3%

10.8%

Headcount at 31 March 2015: 1,164 (31 December 2014: 1,141)

Gross profit growth in constant currencies:

&middot    Asia (13% of Group) 14% on Q1 2014

&middot    Greater China (58% of Asia) 18% on Q1 2014

&middot    Australia / New Zealand (6% of Group) 4% on Q1 2014

Asia Pacific grew 11% in constant currencies and 12% in reported rates, helped by the strong Chinese Renminbi. Asia grew by 14%, flat on Q4. Good growth continued in Greater China, up 18%, with a strong result from our Beijing office. Our businesses elsewhere in Northern & Eastern China and Page Personnel Hong Kong also performed well. Malaysia and Indonesia were up 40% combined, with a good result from Japan (14%) and a record quarter in India (41%). In Australasia, we achieved 4% growth, with Australia marginally improving to 4% and all states growing with the exception of Queensland. Within Australia, our Page Personnel business performed extremely well, up 25%. Fee earner headcount in the region increased by 18.

Americas

Gross Profit (&poundm)

Growth Rates

(14% of Group)

 

Reported

Constant

Q1 2015 vs. Q1 2014

19.3

18.1

6.7%

7.1%

Headcount at 31 March 2015: 891 (31 December 2014: 883)

Gross profit growth in constant currencies:

&middot    Latin America (7% of Group) 4% on Q1 2014

&middot    Brazil (50% of LatAm) -14% on Q1 2014

&middot    North America (7% of Group) 11% on Q1 2014

The Americas grew 7% in both reported and constant currencies, with the strong US dollar offsetting weaker currencies in the rest of the region. Overall North America enjoyed good growth, up 11%, helped by an excellent result in Canada, 35%, with a record quarter from our Montreal office. The US, now against tougher comparatives, grew 7% in constant currency and 17% in reported rates, with growth in our New York operations offset by a difficult Oil & Gas market in Houston. Overall Latin America was up 4%. In Brazil, the market remained cautious with a number of political and economic challenges. As a result, Brazil fell by 14%. However, Latin America excluding Brazil grew 35%, with particularly strong results from Mexico, Argentina and Colombia. Fee earner headcount grew by 8 in the region.

Financial Position

Save for the effects of trading in the first quarter described above, there have been no other significant changes to the financial position of the Group since the publication of the results for the year ended 31 December 2014.

Net cash at 31 March 2015 was in the region of &pound100m (31 December 2014: &pound90.0m). The increase in cash compared to December is as a result of cash inflows from the exercise of share options of around &pound18m.

Subject to shareholder approval at the AGM set for 4 June 2015, the proposed final dividend for 2014 of 7.58p per share is due to be paid on 22 June 2015 to shareholders on the Register as at 22 May 2015, implying a full year dividend of 11.0p per share for the year.

The Group will issue its Second Quarter Trading Update on 14 July 2015.

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