15 April 2024
RESILIENT PERFORMANCE DESPITE
ONGOING CHALLENGING MARKET CONDITIONS
Q1
Highlights*
·
Group gross profit of £219.7m, -12.8% vs.
2023
·
Exited March -18% vs. 2023, impacted partially by
reduced working days and timing of Easter
·
EMEA -12.7%: France -16%; Germany -16%
·
Americas -5.5%: US -15%; Latin America
-4%**
·
Asia Pacific -15.7%: Greater China -15%; SE Asia
-3%; Japan -26%; India +13%
·
UK -19.2%: Michael Page -20%; Page Personnel
-17%
·
Decrease in fee earner headcount of 100 to 5,751
(Q1 2023: 6,639)
·
Productivity up 1% on Q1 2023
·
Cash position remains strong, net cash of c. £67m
(Q4 2023: c. £90m, Q1 2023: c. £105m)
*
In constant currencies vs. 2023 except where stated otherwise
**
Excluding Argentina due to hyperinflation
Q1
Gross Profit Analysis
|
|
Reported
(£m)
|
Constant
|
Year-on-year
|
% of Group
|
Q1 2024
|
Q1 2023
|
%
|
%
|
EMEA
|
56%
|
123.3
|
145.7
|
-15.4%
|
-12.7%
|
Americas
|
17%
|
37.3
|
42.7
|
-12.6%
|
-5.5%
|
Asia Pacific
|
15%
|
32.0
|
41.1
|
-22.0%
|
-15.7%
|
UK
|
12%
|
27.1
|
33.5
|
-19.2%
|
-19.2%
|
Total
|
100%
|
219.7
|
263.0
|
-16.4%
|
-12.8%
|
|
|
|
|
|
|
Permanent
|
73%
|
159.7
|
196.3
|
-18.6%
|
-14.9%
|
Temporary
|
27%
|
60.0
|
66.7
|
-9.9%
|
-6.7%
|
Nicholas Kirk, Chief Executive Officer, PageGroup,
said:
"The slower end to Q4 2023 continued into Q1 2024,
particularly within Continental Europe. Overall, activity levels
remain strong, however we experienced a slight deterioration in job
flow towards the end of the quarter. Conversion of final interviews
to accepted offers is still the most significant challenge, as
candidate and client sentiment remains subdued reflecting the
general macro-economic uncertainty in most of our markets.
Permanent recruitment was more impacted than temporary across all
of our markets, as clients continue to seek more flexible
options.
"While we anticipate a period of low confidence levels, based
on our current outlook, we intend to hold fee earner headcount
broadly at existing levels to ensure we are well placed to take
advantage of opportunities as sentiment and confidence improve. We
have a highly diversified and adaptable business model, a strong
balance sheet and our cost base is under continuous review and can
be adjusted rapidly to match market conditions.
"We continue to see the benefits of our investments in
innovation and technology. Customer Connect is supporting
productivity and enhancing customer experience, Page Insights is
providing real time data to inform business decisions for both Page
and our customers, and we continue to work with our partners to
deploy AI and automation tools into our working environment. Given
the Group's fundamental strengths, we believe we will continue to
perform well despite the challenging environment, and we are
confident in our ability to implement our new strategy driving the
long-term profitability of the Group."
Trading Summary
Group gross profit declined 12.8% in
constant currencies against Q1 2023. The slowdown we saw at the end
of Q4 2023 continued into Q1, with some deterioration experienced,
particularly within Continental Europe. Trading conditions in Asia,
the UK and the US saw no improvement with low levels of client and
candidate confidence continuing to delay time to hire, particularly
in permanent recruitment. As clients' recruitment budgets have
tightened, they have become more risk averse which has slowed the
recruitment process. Although salary levels remain strong, offers
made to candidates were not as elevated as they were in 2022 and
early 2023.
We exited the quarter with March
down 18% on 2023, albeit this was against a tough comparator and
was impacted by the reduced number of working days in March due to
the timing of Easter. However, against this backdrop activity
levels remained good and we continued to experience acute shortages
of highly skilled candidates in nearly all our markets, which was
supportive of continued high fee rates.
Reflecting the uncertain
macro-economic conditions, temporary recruitment (-7%) continued to
outperform permanent (-15%), as clients sought more flexible
options. In line with these conditions, we reduced our fee earner
headcount by 100 (-1.7%). This follows quarterly headcount
reductions since the peak of 7,071 reached at the end of Q3 2022.
As a result of this reduction in headcount, productivity, measured
as gross profit per fee earner, was up 1% versus Q1 2023, despite
the tough macro-economic conditions.
Geographical Analysis (unless
stated otherwise all growth rates are vs. 2023 and in constant
currency)
EMEA
|
Gross Profit
(£m)
|
Growth
Rates
|
(56% of Group)
|
2024
|
2023
|
Reported
|
Constant
|
Q1
|
123.3
|
145.7
|
-15.4%
|
-12.7%
|
·
France (14% of Group) -16%
o Page
Personnel -15%
o Michael Page -17%
·
Germany (13% of Group) -16%
·
Benelux -17%
o Belgium -10%
o Netherlands -19%
·
Southern Europe -8%
o Italy -11%
o Spain -9%
·
Middle East and Africa +12%
Total Headcount at 31 March 2024:
3,838 (31 December 2023: 3,814)
|
In Europe, Middle East and Africa,
gross profit declined 12.7% to £123.3m. The tougher conditions we
saw at the end of 2023 continued into Q1 2024. Reflecting this
uncertainty, temporary recruitment was more resilient than
permanent. France declined 16% for the quarter, with similar
performances in both Michael Page and Page Personnel. This was a
slowdown from the -5% in Q4. Germany declined 16%, compared to -6%
in Q4. Tougher conditions were experienced in permanent
recruitment, down 23%, while our Technology focused interim
business was more resilient, down 8%. Q1 2023 was also a tough
comparator, with the region still growing in the first half of
2023. We reduced our fee earner headcount in Q1 2024 by
46.
Americas
|
Gross Profit
(£m)
|
Growth
Rates
|
(17% of Group)
|
2024
|
2023
|
Reported
|
Constant
|
Q1
|
37.3
|
42.7
|
-12.6%
|
-5.5%
|
·
North America (9% of Group) -15%
o US
-15%
·
Latin America (8% of Group) +9%
o Mexico -12%
o Brazil +10%
Total Headcount at 31 March
2024: 1,363 (31 December 2023:
1,329)
|
In the Americas, we delivered gross
profit of £37.3m, down 5.5% against Q1 2023. In the US, we declined
15%, an improvement on Q4 2023, albeit this was due partially to a
softer comparator. The conditions we saw at the end of 2023
continued into Q1, with uncertainty around market conditions
affecting both candidate and client confidence, particularly within
Accounting and Financial Services. In Latin America, gross profit
grew 9%, despite macro-economic uncertainty across the region. This
was also partially due to hyperinflation in Argentina following the
election. Excluding Argentina, the region declined 4%. Mexico, our
largest country in the region, was down 12%, compared to -6% in Q4.
Brazil was up 10%, however, elsewhere in Latin America, our
remaining countries declined 6%, collectively. Fee earner headcount
in the region increased by 37.
Asia Pacific
|
Gross Profit
(£m)
|
Growth
Rates
|
(15% of Group)
|
2024
|
2023
|
Reported
|
Constant
|
Q1
|
32.0
|
41.1
|
-22.0%
|
-15.7%
|
·
Asia (12% of Group) -11%
·
Greater China (4% of Group and 33% of Asia)
-15%
o Mainland China -19%
o Hong
Kong -12%
·
South East Asia -3%
·
India +13%
·
Japan -26%
·
Australia -32%
Total Headcount at 31 March 2024:
1,472 (31 December 2023:1,552)
|
In Asia Pacific, gross profit for Q1
was down 15.7% against 2023 to £32.0m. Greater China declined 15%,
with Mainland China down 19% and Hong Kong down 12% for the
quarter. This was a worsening from the performance in Q4, due to a
further reduction in headcount of c. 30 in Q1. South East
Asia declined 3% with Singapore returning to growth in Q1. India
continued to deliver the standout performance in the region,
delivering a record Q1, up 13%. Japan experienced tougher
conditions during the quarter, declining 26%. Australia declined
32%, below the Q4 growth rate of -24%, with tough conditions in all
states. Our fee earner headcount in the region decreased by 65,
mainly in Australia and Greater China.
UK
|
Gross Profit
(£m)
|
Growth Rate
|
(12% of Group)
|
2024
|
2023
|
|
Q1
|
27.1
|
33.5
|
-19.2%
|
·
Michael Page -20%
·
Page Personnel
-17%
Total Headcount at 31 March 2024:
1,105 (31 December 2023: 1,164)
|
In the UK, Q1 gross profit declined
19.2% against 2023 to £27.1m, following the decline of 19.9% in Q4
2023. We continued to see clients deferring hiring decisions and
candidates cautious about accepting offers. Reflecting the
uncertain market conditions, clients sought more flexible options,
and, as such, temporary recruitment (-12%) was more resilient than
permanent recruitment (-22%). In line with the more challenging
trading conditions, our fee earner headcount reduced by 26 in Q1
and at the end of the quarter was 17% lower than Q1
2023.
Perm/Temp mix
Gross profit from permanent
recruitment decreased 18.6% in reported rates and 14.9% in constant
currencies to £159.7m (Q1 2023: £196.3m). Gross profit from
temporary recruitment decreased 9.9% in reported rates and 6.7% in
constant currencies to £60.0m (Q1 2023: £66.7m). This resulted in a
ratio of permanent to temporary recruitment gross profit of 73:27
(Q1 2023: 74:26).
Headcount
Our fee earner headcount reduced by
100 (-1.7%) during Q1, which was slower than the quarterly
reductions in 2023. Our non-operations headcount rose by 19 in Q1,
which is due to double running of c. 50 heads as we transition
activities out of our UK SSC. Overall, the Group had 5,751 fee
earners and a total headcount of 7,778.
Foreign Exchange
Foreign exchange movements had a
negative impact on the Group's results in Q1, decreasing our Q1
reported gross profit by 3.6 percentage points, or
£9.4m.
Financial Position
Save for the effects of Q1 trading
detailed above and the purchase of shares into the Employee Benefit
Trust (EBT) of c. £4m, there have been no other significant changes
in the financial position of the Group since the publication of the
results for the year ended 31 December 2023. Net cash at 31 March
2024 was c. £67m (Q4 2023: c. £90m, Q1
2023: c. £105m).
Shares
At 31 March 2023 there were
328,618,774 Ordinary shares in issue, of which 15,150,808 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 14,284,829 shares and consequently these shares should be
excluded when calculating earnings per share. The total number of
voting rights in the Company is 328,618,774.
Cautionary Statement
This First Quarter 2024 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.
The Group will issue its Q2 Results
on 10 July 2024.
Enquiries:
PageGroup
|
+44
(0)19 3226 4032
|
Nicholas Kirk, Chief Executive
Officer
|
|
Kelvin Stagg, Chief Financial
Officer
|
|
|
|
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/6602b82f6fb95d1300a3a25f/vdag
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
65 88 59 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 15 April 2024 at:
https://www.page.com/presentations/year/2024