TIDMPAGE
RNS Number : 0084F
PageGroup plc
10 July 2019
10 July 2019
PAGEGROUP
SECOND QUARTER AND FIRST HALF 2019 TRADING UPDATE
A record quarter for the Group
Q2 Highlights*
-- Group gross profit growth +7.4% (+7.9% in reported rates)
-- A record quarter for the Group, 16 countries grew over 10%
-- Large, High Potential markets (35% of Group) +14%
-- EMEA +9.0%; France +6%; Germany +24%
-- Asia Pacific +4.7%; Greater China -1%; South East Asia +8%; Australia +4%
-- Americas +17.4%; North America +19%; Latin America +15%
-- UK -2.4%; Michael Page -6%; Page Personnel +8%
-- Professional Services disciplines (25% of Group) fastest growing at +11.7%
-- Fee earner headcount reduced by 122 to react to market conditions
-- Strong balance sheet, net cash of c. GBP81m (Q1 2019: c. GBP76m; Q2 2018: c. GBP87m)
Outlook
-- Given current macro-economic conditions, we currently expect
2019 operating profit to be towards the lower end of the range of
current market forecasts**
* In constant currencies except where stated otherwise
** Company compiled consensus for 2019 operating profit of
GBP161.1m with a range of GBP156.5m - GBP168.0m.
Q2 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group Q2 2019 Q2 2018 % %
----------- -------- -------- ------- ---------
EMEA 48% 108.9 100.2 +8.7% +9.0%
----------- -------- -------- ------- ---------
Asia Pacific 20% 43.8 41.2 +6.4% +4.7%
----------- -------- -------- ------- ---------
Americas 16% 36.9 30.9 +19.2% +17.4%
----------- -------- -------- ------- ---------
UK 16% 35.0 35.9 -2.4% -2.4%
----------- -------- -------- ------- ---------
Total 100% 224.6 208.2 +7.9% +7.4%
----------- -------- -------- ------- ---------
Permanent 76% 171.5 162.1 +5.8% +5.1%
----------- -------- -------- ------- ---------
Temporary 24% 53.1 46.1 +15.1% +15.4%
----------- -------- -------- ------- ---------
H1 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group H1 2019 H1 2018 % %
----------- -------- -------- ------- ---------
EMEA 49% 213.1 194.9 +9.3% +10.2%
----------- -------- -------- ------- ---------
Asia Pacific 19% 81.9 74.1 +10.5% +9.1%
----------- -------- -------- ------- ---------
UK 16% 69.4 69.7 -0.3% -0.3%
----------- -------- -------- ------- ---------
Americas 16% 69.1 57.3 +20.6% +19.4%
----------- -------- -------- ------- ---------
Total 100% 433.5 396.0 +9.5% +9.5%
----------- -------- -------- ------- ---------
Permanent 76% 330.1 304.2 +8.5% +8.3%
----------- -------- -------- ------- ---------
Temporary 24% 103.4 91.8 +12.6% +13.3%
----------- -------- -------- ------- ---------
Kelvin Stagg, Chief Financial Officer, said:
"The Group delivered a record quarter, with gross profit growth
of 7.4% in constant currencies and 16 countries growing in excess
of 10%.
"Our five Large, High Potential markets of Germany, Greater
China, South East Asia, the US and Latin America grew 14%
collectively. Germany grew 24%, with a standout performance from
our Interim business, which is mainly Technology focused, up 47%.
Greater China's growth slowed to -1%, with confidence continuing to
be affected by trade tariff uncertainty and more recently, social
unrest in Hong Kong. South East Asia was up 8%, with strong
performances in our newer countries of Indonesia, Thailand and
Vietnam. The US grew 22%, with strong growth in our regional
offices. Latin America was up 15%, with Mexico up 30%, Brazil up 9%
and the other four countries in Latin America up 9%, collectively.
In our six Large, Proven markets, the UK was down 2.4%, due to
continued Brexit related uncertainty. France grew 6%, the
Netherlands 12%, but Italy slowed to 7%, reflecting the weaker
market conditions. Australia and Spain both delivered growth, up 4%
and 3%, respectively. Outside these two categories, we saw good
growth in the majority of our other markets, with an outstanding
performance in India, which grew 52%.
"Having added 619 fee earners in 2018 and 41 in Q1, our fee
earner headcount reduced by 122 in Q2. Fee earner headcount fell in
markets where we saw more challenging conditions, such as France,
Greater China and the UK. We continued to invest in markets where
we saw the greatest growth, such as the US and India, but we are
mindful of the weaker macro-economic conditions seen in much of
Continental Europe. Our flexible business model enables us to react
quickly to changes in market conditions by adjusting our headcount
to 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. It is clear that macro-economic conditions in a
number of our regions are becoming more challenging, and, as such,
we currently expect 2019 operating profit to be towards the lower
end of the range of current market forecasts**."
**Company compiled consensus for 2019 operating profit of
GBP161.1m with a range of GBP156.5m - GBP168.0m.
Group Trading Update
PageGroup delivered second quarter gross profit of GBP224.6m, up
7.4% in constant currencies and 7.9% in reported rates. In constant
currencies, Michael Page grew 6.2%, with Page Personnel growing
faster, up 10.3% in the quarter.
Headcount
Having added 619 fee earners in 2018 and 41 in Q1, our fee
earner headcount reduced by 122 in Q2. Fee earner headcount fell in
markets where we saw more challenging conditions, such as France,
Greater China and the UK. We continued to invest in markets where
we saw the greatest growth, such as the US and India, but we are
mindful of the weaker macro-economic conditions seen in much of
Continental Europe. Our flexible business model enables us to react
quickly to changes in market conditions by adjusting our headcount
to focus on productivity and conversion. Our operational support
headcount increased by 43 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 Northern
and Central Europe during the first half of 2019, and the final
countries in Europe last weekend. This represented 6,035 fee
earners and a total headcount of 7,763.
Perm/Temp mix
Gross profit from permanent recruitment grew 5.8% in reported
rates and 5.1% in constant currencies, to GBP171.5m (Q2 2018:
GBP162.1m). Gross profit from temporary recruitment grew 15.1% in
reported rates and 15.4% in constant currencies, to GBP53.1m (Q2
2018: GBP46.1m). This reflected the sentiment of uncertainty in
mature markets and the structural evolution of temporary in
emerging markets. This resulted in a ratio of permanent to
temporary recruitment of 76:24.
Q2 Gross Profit - Discipline analysis
Reported (GBPm) Constant
Year-on-year % of Q2 2019 Q2 2018 % %
Group
------- -------- -------- ------- ---------
Finance
Accounting and Financial Services 35% 78.1 72.1 +8.3% +8.0%
------- -------- -------- ------- ---------
Professional Services
Legal, Technology, HR, Secretarial, Healthcare 25% 55.7 49.7 +12.1% +11.7%
------- -------- -------- ------- ---------
Technical
Engineering, Property & Construction, Procurement & Supply Chain 24% 53.9 49.6 +8.8% +7.8%
------- -------- -------- ------- ---------
Marketing, Sales and Retail 16% 36.9 36.8 +0.0% -0.2%
------- -------- -------- ------- ---------
Total 100% 224.6 208.2 +7.9% +7.4%
------- -------- -------- ------- ---------
H1 Gross Profit - Discipline analysis
Reported (GBPm) Constant
Year-on-year % of Group H1 2019 H1 2018 % %
----------- -------- -------- ------- ---------
Finance
Accounting and Financial Services 35% 150.6 136.7 +10.2% +10.5%
----------- -------- -------- ------- ---------
Professional Services
Legal, Technology, HR , Secretarial, Healthcare 25% 107.3 94.5 +13.7% +13.7%
----------- -------- -------- ------- ---------
Technical
Engineering, Property & Construction, Procurement & Supply
Chain 24% 105.3 94.7 +11.1% +10.5%
----------- -------- -------- ------- ---------
Marketing, Sales and Retail 16% 70.3 70.1 +0.2% +0.4%
----------- -------- -------- ------- ---------
Total 100% 433.5 396.0 +9.5% +9.5%
----------- -------- -------- ------- ---------
Geographical analysis (unless otherwise stated all growth rates
are in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
(48% of Group) Reported Constant
----------- --------- ---------- ----------
Q2 2019 vs. Q2 2018 108.9 100.2 +8.7% +9.0%
----------- --------- ---------- ----------
H1 2019 vs. H1 2018 213.1 194.9 +9.3% +10.2%
----------- --------- ---------- ----------
Headcount at 30 June 2019: 3,316 (31 March 2019: 3,320)
* France (16% of Group) +6%
* Germany (8% of Group) +24%
EMEA Q2 gross profit grew 9.0% to GBP108.9m, a record quarter.
Both Michael Page and Page Personnel continued to deliver strong
performances, with growth of 8% and 10%, respectively. France,
representing 16% of the Group, achieved a record quarter, growing
6%, marginally down from 8% in Q1 2019. Germany also delivered a
record quarter, up 24%, with our Interim business, mainly focused
on Technology, growing 47%. Italy grew 7% and Spain was up 3%, both
impacted by slower economies. Benelux grew 13%, with Belgium
delivering a record quarter. The Middle East and Africa grew 4%,
with the UAE impacted by a tough comparator. Increased
macro-economic uncertainty impacted market confidence in EMEA and,
as such, we experienced a slowing towards the end of the quarter.
As a result, our fee earner headcount reduced by 28, mainly in
France.
Asia Pacific Gross Profit (GBPm) Growth Rates
(20% of Group) Reported Constant
---------- ---------- ---------- ----------
Q2 2019 vs. Q2 2018 43.8 41.2 +6.4% +4.7%
---------- ---------- ---------- ----------
H1 2019 vs. H1 2018 81.9 74.1 +10.5% +9.1%
---------- ---------- ---------- ----------
Headcount at 30 June 2019: 1,737 (31 March 2019: 1,784)
* Asia (15% of Group) +6%
* Greater China (8% of Group and 53% of Asia) -1%
* Australasia (5% of Group) +1%
In Asia Pacific, gross profit grew 4.7% to GBP43.8m. Greater
China, one of our Large, High Potential markets declined 1%, due to
the continuing impact of trade tariff uncertainty in Mainland
China, particularly affecting our larger international clients, and
more recently, social unrest in Hong Kong. South East Asia, another
of our Large, High Potential markets, grew 8%, with strong growth
in Indonesia and Thailand, offset by a 3% decline in Singapore,
which was affected by the wider trade tariff concerns. Japan, where
we continue to focus on both the Gaishikei and Nikkei markets, grew
13%, a record quarter. India, now with over 140 fee earners,
delivered another record quarter, up 52%. Australia grew 4%, with
strong growth in Victoria offset by more challenging trading in New
South Wales. Overall fee earner headcount in the region declined by
37 in the quarter, predominantly in Mainland China.
Americas Gross Profit (GBPm) Growth Rates
(16% of Group) Reported Constant
---------- ---------- ---------- ----------
Q2 2019 vs. Q2 2018 36.9 30.9 +19.2% +17.4%
---------- ---------- ---------- ----------
H1 2019 vs. H1 2018 69.1 57.3 +20.6% +19.4%
---------- ---------- ---------- ----------
Headcount at 30 June 2019: 1,342 (31 March 2019: 1,342)
* North America (10% of Group) +19%
* Latin America (6% of Group) +15%
The Americas, our fastest growing region, grew 17.4% to
GBP36.9m. The US delivered a record quarter, up 22%. Growth was
strongest in our regional offices, with notable performances from
Boston, Chicago, Houston and Los Angeles. Latin America grew 15%,
delivering another record quarter for the region. Mexico, the
largest country in the region, grew 30%, a record quarter. The
Brazilian market continued to perform well, growing 9%. Elsewhere,
the other four countries in the region grew 9% collectively, with
record performances from Argentina and Peru. We reduced our fee
earner headcount by 17 across the Americas in the quarter, with an
increase in the US offset by a decrease in Latin America.
UK Gross Profit (GBPm) Growth Rate
(16% of Group)
----------- --------- ----------------
Q2 2019 vs. Q2 2018 35.0 35.9 -2.4%
----------- --------- ----------------
H1 2019 vs. H1 2018 69.4 69.7 -0.3%
----------- --------- ----------------
Headcount at 30 June 2019: 1,368 (31 March 2019: 1,396)
The UK, now 16% of the Group, declined 2.4%, with continued
Brexit related uncertainty impacting candidate and client
confidence. Page Personnel, which represents a quarter of the UK,
grew 8%. Michael Page, which is focused on more senior
opportunities and continued to be impacted to a greater extent by
the uncertainty, declined 6%. Fee earner headcount decreased by 40
in the quarter, all within Michael Page.
Financial Position
Save for the effects of Q2 trading detailed above, and the
payment of a final dividend of GBP29m, 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 2019.
Net cash at 30 June 2019, was in the region of GBP81m (Q1 2019: c.
GBP76m; Q2 2018: c. GBP87m).
Shares
At 30 June 2019 there were 328,539,724 Ordinary shares in issue,
of which 8,982,310 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 6,381,543 shares and consequently these
shares should be excluded when calculating earnings per share. The
total number of voting rights in the Company is 328,539,724.
Cautionary Statement
This Second 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 8:30am today. The live presentation can
be viewed by following the link:
https://www.investis-live.com/pagegroup/5d0b869d379ece0b00469838/ased
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 53 63 06 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 July 2019 at:
https://www.page.com/investors/investor-library.aspx
The Group will issue its interim results for the six months
ending 30 June 2019 on 7 August 2019 followed by the Third Quarter
Trading Update on 9 October 2019.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
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END
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