TIDMPAGE
RNS Number : 6857V
PageGroup plc
10 April 2019
10 April 2019
PageGroup plc
FIRST QUARTER 2019 TRADING UPDATE
Growth across all of our regions
Q1 Highlights*
-- Group gross profit growth +11.7% (+11.2% in reported rates)
-- All four regions delivered growth, 12 countries grew over 20%
-- Large, High Potential markets (33% of Group) +19%
-- EMEA +11.4%; France +8%; Germany +23%
-- Asia Pacific +14.9%; Greater China +9%; South East Asia +11%; Australia +13%
-- UK +1.7%; Michael Page -1%; Page Personnel +10%
-- Americas +21.4%; North America +21%; Latin America +22%
-- Professional Services disciplines (25% of Group) fastest growing at +16.0%
-- Record headcount of 7,842; fee earner to operational support staff ratio maintained at 79:21
-- Strong balance sheet, net cash of c. GBP76m
-- Expect 2019 operating profit to be in line with consensus**
* In constant currencies except where stated otherwise
**Company compiled consensus for 2019 operating profit of
GBP160.4m
Q1 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group Q1 2019 Q1 2018 % %
----------- -------- -------- ------- ---------
EMEA 50% 104.1 94.8 +9.9% +11.4%
----------- -------- -------- ------- ---------
Asia Pacific 18% 38.2 32.9 +16.0% +14.9%
----------- -------- -------- ------- ---------
UK 17% 34.4 33.8 +1.7% +1.7%
----------- -------- -------- ------- ---------
Americas 15% 32.1 26.3 +21.9% +21.4%
----------- -------- -------- ------- ---------
Total 100% 208.8 187.8 +11.2% +11.7%
----------- -------- -------- ------- ---------
Permanent 76% 158.5 142.1 +11.5% +11.8%
----------- -------- -------- ------- ---------
Temporary 24% 50.3 45.7 +10.2% +11.4%
----------- -------- -------- ------- ---------
Kelvin Stagg, Chief Financial Officer, said:
"The Group grew gross profit 11.7% in constant currencies with
all four regions delivering growth and 12 countries growing in
excess of 20%.
"Our five Large, High Potential markets of Germany, Greater
China, Latin America, South East Asia and the US continued to
perform strongly, growing 19% collectively. Germany grew 23%, with
our Interim business up 27%. In Asia Pacific, Greater China's
growth slowed to 9% in Q1 from 12% in Q4 2018, due to confidence
being affected by trade tariff uncertainty. South East Asia was up
11%, with Singapore up 13%. The US grew 24%, with strong growth in
our regional offices. Latin America was up 22%, with Brazil up 20%,
and the other five countries in Latin America up 22%,
collectively.
"In our six Large, Proven markets, the UK delivered a third
consecutive quarter of marginal growth, up 1.7%, despite continued
Brexit related uncertainty. In France, growth slowed to 8% with the
'gilets jaunes' protests impacting candidate confidence and our
investment in fee earners slowed as we focused on productivity and
conversion. Italy and the Netherlands both continued to perform
well, up 18% and 12%, respectively. Spain grew 9%, in line with its
Q4 2018 growth rate. Australia delivered another strong quarter, up
13%.
"Outside these two categories, we saw good growth in the
majority of our other markets, particularly in India and Japan,
which grew 49% and 34%, respectively.
"Having added 619 fee earners in 2018, net additions in Q1 were
41, with increases in markets where we saw the strongest growth,
offset by natural attrition elsewhere. Our flexible business model
enables us to react quickly to changes in market conditions by
adjusting our headcount, and following our recent COO office
appointment, to have a greater focus on productivity and
conversion.
"We will continue to focus on driving profitable growth, while
continuing our strategic investments towards our Vision of 10,000
headcount, GBP1bn of gross profit and GBP200m - GBP250m of
operating profit. We are pleased with the Group's performance in Q1
and, at this early stage in the year, expect 2019 operating profit
to be in line with consensus**."
**Company compiled consensus for 2019 operating profit of
GBP160.4m.
Group Trading Update
PageGroup delivered first quarter gross profit of GBP208.8m, up
11.7% in constant currencies and 11.2% in reported rates. In
constant currencies, Michael Page grew 9.9%, with Page Personnel
growing faster, up 15.6% in the quarter.
Headcount
Having added 619 fee earners in 2018, we added a further 41 in
Q1. Fee earner additions were mainly into markets where we saw the
strongest growth, while fee earner headcount in the UK declined by
35 through natural attrition. Our flexible business model enables
us to react quickly to changes in market conditions by adjusting
our headcount, and following our recent COO office appointment, to
have a greater focus on productivity and conversion. Our
operational support headcount increased by 29 in the quarter. These
additions were mainly temporary in nature to support the
implementation of our new Global Finance System, with roll-outs in
Latin America and Europe during the first half of 2019. Our fee
earner to operational support staff ratio was maintained at its
record of 79:21. This represented 6,157 fee earners and a total
headcount of 7,842.
Perm/Temp mix
Gross profit from permanent recruitment grew 11.5% in reported
rates and 11.8% in constant currencies, to GBP158.5m (Q1 2018:
GBP142.1m). Gross profit from temporary recruitment grew 10.2% in
reported rates and 11.4% in constant currencies, to GBP50.3m (Q1
2018: GBP45.7m). This resulted in a ratio of permanent to temporary
recruitment of 76:24.
Q1 Gross Profit - Discipline analysis
Reported (GBPm) Constant
Year-on-year % of Q1 2019 Q1 2018 % %
Group
------- -------- -------- ------- ---------
Finance
Accounting and Financial Services 34% 71.9 64.4 +11.7% +12.5%
------- -------- -------- ------- ---------
Professional Services
Legal, Technology, HR, Secretarial, Healthcare 25% 51.7 44.7 +15.5% +16.0%
------- -------- -------- ------- ---------
Technical
Engineering, Property & Construction, Procurement & Supply Chain 25% 51.4 45.2 +13.6% +13.5%
------- -------- -------- ------- ---------
Marketing, Sales and Retail 16% 33.8 33.5 +1.0% +1.9%
------- -------- -------- ------- ---------
Total 100% 208.8 187.8 +11.2% +11.7%
------- -------- -------- ------- ---------
Geographical analysis (unless otherwise stated all growth rates
are in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
(50% of Group) Reported Constant
----------- --------- ----------- -----------
Q1 2019 vs. Q1 2018 104.1 94.8 +9.9% +11.4%
----------- --------- ----------- -----------
Headcount at 31 March 2019: 3,320 (31 December 2018: 3,299)
* France (16% of Group) +8%
* Germany (8% of Group) +23%
EMEA Q1 gross profit grew 11.4% to GBP104.1m. Both Michael Page
and Page Personnel continued to deliver strong performances, with
growth of 10% and 12%, respectively. France, representing 16% of
the Group, grew 8%, down from 10% in Q4 2018. The 'gilets jaunes'
protests and political uncertainty have impacted confidence,
leading to shortages in more senior candidates. This has resulted
in a slower increase in our fee earner headcount, combined with an
increased focus on productivity and conversion. Germany delivered a
record quarter, up 23%, with our Interim business growing 27%.
Italy grew 18% and Spain was up 9%, in line with its Q4 growth
rate, with a marginal decline in Catalonia offset by strong growth
elsewhere. Benelux grew 11%, with the Netherlands up 12% and
Belgium delivering a record quarter. The Middle East and Africa
grew 12%, with continued strong growth in the UAE, up 25%. Fee
earner headcount across the region increased by 16 in the quarter,
mainly into Germany and the Netherlands.
Asia Pacific Gross Profit (GBPm) Growth Rates
(18% of Group) Reported Constant
---------- ---------- ----------- -----------
Q1 2019 vs. Q1 2018 38.2 32.9 +16.0% +14.9%
---------- ---------- ----------- -----------
Headcount at 31 March 2019: 1,784 (31 December 2018: 1,709)
* Asia (14% of Group) +16%
* Greater China (7% of Group and 53% of Asia) +9%
* Australasia (4% of Group) +13%
In Asia Pacific, gross profit grew 14.9% to GBP38.2m. Greater
China, one of our Large, High Potential markets grew 9%, marginally
below its Q4 growth rate of 12%, due to the continuing impact of
trade tariff uncertainty, particularly in Mainland China. This has
also led to reduced confidence in Hong Kong. South East Asia,
another of our Large, High Potential markets, grew 11%, with
continued strong growth in Singapore, up 13%. Japan, where we
continue to focus on both the Gaishikei and Nikkei markets, grew
34%. India delivered another record quarter, up 49%. Australia grew
13%, with a record performance from our Page Personnel brand.
Overall fee earner headcount in the region grew 46 in the quarter,
mainly in Australia and Japan, balanced by responding quickly to
changing market conditions in Mainland China.
UK Gross Profit (GBPm) Growth Rate
(17% of Group)
---------- ---------- -----------------
Q1 2019 vs. Q1 2018 34.4 33.8 +1.7 %
---------- ---------- -----------------
Headcount at 31 March 2019: 1,396 (31 December 2018: 1,436)
The UK grew 1.7%, its third consecutive quarter of marginal
growth, despite continued Brexit related uncertainty impacting
candidate and client confidence. Page Personnel, which represents a
quarter of the UK, grew 10%. Michael Page, which is focused on more
senior opportunities and was impacted by the uncertainty to a
greater extent, declined 1%. Fee earner headcount decreased by 35
through natural attrition in the quarter to 969.
Americas Gross Profit (GBPm) Growth Rates
(15% of Group) Reported Constant
---------- ---------- ----------- -----------
Q1 2019 vs. Q1 2018 32.1 26.3 +21.9% +21.4%
---------- ---------- ----------- -----------
Headcount at 31 March 2019: 1,342 (31 December 2018: 1,328)
* North America (9% of Group) +21%
* Latin America (6% of Group) +22%
The Americas continued to be our fastest growing region and grew
21.4% to GBP32.1m. The US delivered a record quarter, up 24%.
Growth was strong in our regional offices, with notable
performances from Boston, Chicago, Houston and Los Angeles. Latin
America grew 22%, another record quarter for the region. The
Brazilian market continued to perform well, growing 20%, its sixth
consecutive quarter of double digit growth. Mexico, the largest
country in the region, grew 33%, a record quarter. Elsewhere, the
other four countries in the region grew 15% collectively, with
record performances from Argentina, Colombia and Peru. We added 14
fee earners across the Americas in the quarter, with an increased
focus on productivity and conversion.
Financial Position
Save for the effects of Q1 trading detailed above, 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
December 2018. Net cash at 31 March 2019, was in the region of
GBP76m (Q1 2018: c. GBP91m). The decrease in cash compared to Q1
2018 is largely due to a reduction in cash received from share
option exercises, where GBP10.5m was received in Q1 last year,
compared to only GBP250k in Q1 2019.
Shares
At 31 March 2019 there were 328,344,724 Ordinary shares in
issue, of which 9,657,907 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 7,855,945 shares and
consequently these shares should be excluded when calculating
earnings per share. The total number of voting rights in the
Company is 328,344,724.
Cautionary Statement
This First Quarter 2019 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.
Enquiries:
PageGroup +44 (0)20 3077 8425
Kelvin Stagg, Chief Financial Officer
Jeremy Tatham, Group Financial Controller
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 8:30 am today. The live presentation can
be viewed by following the link:
https://www.investis-live.com/pagegroup/5c866682ff46a80a002154dd/plfd
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 63 96 21 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
10 April 2019 at:
https://www.page.com/investors/investor-library.aspx
The Group will issue its Second Quarter Trading Update on 10
July 2019.
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END
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