Improved trading conditions boost results for big recruiters
Manpower, Randstad, Hays and PageGroup all welcomed better third quarter results from improved trading conditions, despite continued uncertainty about a sustained recovery.
ManpowerGroup (NYSE: MAN) reported net earnings of $0.18 per diluted share for the three months ended September 30, compared to $2.42 in the prior year period. Net earnings in the quarter were $10.3 million, compared to $146.1 million a year earlier, while revenue was $4.6 billion, a 13% decline from the prior year period.
While the results were impacted by $50 million in restructuring costs as well as a weaker US dollar, Manpower pointed to five months of improvement since the height of the pandemic in April.
Jonas Prising, ManpowerGroup Chairman and CEO, says the company experienced strengthening demand during the third quarter, reflecting the diversity of their offering and digital capabilities. “We also continued to advance strategic initiatives in the quarter including restructuring activities to improve efficiency, adjustments to our country portfolio to improve profitability, and ongoing execution of our digitization initiatives,” he adds. “All of these actions are improving our business for further progress as we gradually recover from the current crisis.
"We anticipate diluted earnings per share in the fourth quarter will be between $1.06 and $1.14, which includes an estimated favourable currency impact of 3 cents."
Dutch multinational Randstad reported a 13.1% decline in organic growth for the third quarter on underlying EBITA of €199 million, an EBITA margin of 3.9%, and a gross margin of 18.9%, down 120bp year on year.
CEO Jacques van den Broek says trading conditions gradually recovered in most of the group’s markets during the quarter, with positive momentum continuing in October.
“Our Q3 results again demonstrate the strong operational agility of our highly experienced management teams, while underpinning the resilience of our diversified portfolio and free cash flow generation,” he says. “At the same time, visibility remains limited with ongoing macroeconomic uncertainty and recent signs of partial lockdowns again.”
Hays reported an 29% overall drop in net fees for the third quarter, with a 35% decline in permanent fees and a 25% drop in temporary fees. The UK and Ireland were the hardest hit sector in the group’s portfolio, down 34%, compared to a 31% decline in Germany, 26% in Australia and New Zealand, and 27% in the rest of the world.
Alistair Cox, Hays Chief Executive, says the Temp business has remained encouragingly stable and there had been some improvements in Perm, particularly in markets previously hardest hit by lockdowns.
“ANZ delivered a relatively resilient performance, and Germany was stable. Countries with previously stringent lockdowns, such as the UK, France and Spain, saw improvement, and Asia and the Americas were broadly flat sequentially,” he says.
“Although many uncertainties remain, our business is resilient [and] we are confident we can take further market share. We have made a good start to our ‘Return to Growth’ investment programme, and we are confident this will accelerate our fee momentum once we emerge from the pandemic, particularly in structural growth areas such as IT, large corporate accounts and life sciences.”
PageGroup announced a gross profit of £143.5 million for the third quarter, down 31.9%, compared to a 47.6% decline for the second quarter. The group declared a “strong cash position” of around £152 million net at the end of September.
Steve Ingham, PageGroup CEO, says improved activity levels in June had progressed further. “We exited the quarter in September at -26%, with some markets, such as mainland China and Japan, either flat or returning to growth,” he says.
"The improving trading conditions resulted in the group making a small profit in the quarter, despite an increase in our cost base over Q2 as we returned staff from furlough and to full pay from July 1. Having seen conditions improve through Q3, we now look forward to driving improved activity and gross profit in Q4.”