TIDMPAGE
RNS Number : 4653L
PageGroup plc
13 January 2021
13 January 2021
PageGroup plc
FOURTH QUARTER AND FULL YEAR 2020 TRADING UPDATE
Q4 Results Summary*
-- Group gross profit of GBP165.5m, -20.2% (Q3: -31.9%)
-- Monthly sequential improvement through the quarter, exiting in December at -18.2%
-- Large, High Potential markets (34% of Group) -17%
-- EMEA -18.6%: France -20%; Germany -13%
-- Asia Pacific -10.2%: Greater China -10%; SE Asia -13%; Japan +18%
-- Americas -23.2%: US -31%; Latin America -13%
-- UK -34.2%: Michael Page -31%; Page Personnel -43%
-- Strong cash position, net cash of c. GBP165m (Q3 2020: GBP152m, Q4 2019: GBP98m)
-- Reduction in fee earner headcount of 78 in Q4
-- Fee earner headcount reduced by a net 882 (15%) for the year,
with recent joiners or those on performance review leaving,
partially offset by the hiring of c. 400 experienced fee
earners
* In constant currencies except where stated otherwise
Q4 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group Q4 2020 Q4 2019 % %
----------- -------- -------- ------- ---------
EMEA 53% 87.7 103.5 -15.2% -18.6%
----------- -------- -------- ------- ---------
Asia Pacific 20% 34.0 37.4 -9.0% -10.2%
----------- -------- -------- ------- ---------
Americas 14% 22.8 32.3 -29.6% -23.2%
----------- -------- -------- ------- ---------
UK 13% 21.0 31.9 -34.2% -34.2%
----------- -------- -------- ------- ---------
Total 100% 165.5 205.1 -19.3% -20.2%
----------- -------- -------- ------- ---------
Permanent 73% 121.3 150.6 -19.5% -20.0%
----------- -------- -------- ------- ---------
Temporary 27% 44.2 54.5 -18.9% -20.7%
----------- -------- -------- ------- ---------
FULL YEAR GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
Year-on-year % of Group FY 2020 FY 2019 % %
----------- -------- -------- ------- ---------
EMEA 52% 318.8 418.3 -23.8% -24.5%
----------- -------- -------- ------- ---------
Asia Pacific 20% 121.1 163.3 -25.8% -25.1%
----------- -------- -------- ------- ---------
Americas 15% 88.8 138.8 -36.0% -31.4%
----------- -------- -------- ------- ---------
UK 13% 81.0 135.1 -40.1% -40.1%
----------- -------- -------- ------- ---------
Total 100% 609.7 855.5 -28.7% -28.2%
----------- -------- -------- ------- ---------
Permanent 72% 436.6 643.8 -32.2% -31.5%
----------- -------- -------- ------- ---------
Temporary 28% 173.1 211.7 -18.2% -18.0%
----------- -------- -------- ------- ---------
Commenting, Steve Ingham, Chief Executive Officer, PageGroup,
said:
"The Group's results improved in each of the three months of Q4,
which continued the monthly sequential improvement since May. This
performance was achieved despite the background of continued and
increasing restrictions or lockdowns in many of our markets. Having
exited Q3 in September at -26%, Group gross profit in December
improved to -18.2%, with a number of markets such as Mainland China
and Japan growing in the last month of the year. Overall, Q4 was
-20.2% compared to -31.9% in Q3.
"Our focus continues to be on the protection and wellbeing of
employees, candidates and clients during the pandemic, whilst we
progress our strategy of investment in our platform to take
advantage of the recovery.
"We have a resilient business model, with some areas such as
Technology, Digital, Healthcare and Life Sciences, delivering
robust results during the pandemic. Two of our recent investments,
our Interim business in Germany and the Nikkei market in Japan,
both performed particularly well with Interim up 3% and Nikkei up
47% for the year. In total we recruited around 400 experienced
hires, largely into these growing disciplines and markets in 2020,
and we will continue to focus on these businesses going forward. We
have also continued to invest in our new operating system, Customer
Connect, with around a third of our fee earners now live on the
system. Investment in innovation also continues in Page Insights,
our data intelligence tool, which provides rich information for our
clients and consultants into hiring trends by specialism and
geography, using internal and external data.
"As we enter 2021, there remains a high degree of global
macro-economic uncertainty in many of our markets, as COVID-19
remains a significant global issue and lockdowns have returned in a
number of the Group's markets. However, in the UK we are encouraged
that the Brexit deal has provided a degree of clarity. We remain
confident in our strategy of maintaining our platform and
continuing to carefully invest in headcount, as well as continuing
to roll-out new technology and innovation. We are the clear leader
in many of our markets, with a highly experienced senior management
team, which, we believe, positions us well to take advantage of
opportunities to grow and improve our business. We have maintained
our focus on our long-term vision for the Group to drive progress
towards our strategic goals."
Perm/Temp mix
Gross profit from permanent recruitment declined 19.5% in
reported rates and 20.0% in constant currencies, to GBP121.3m (Q4
2019: GBP150.6m). Gross profit from temporary recruitment declined
18.9% in reported rates and 20.7% in constant currencies, to
GBP44.2m (Q4 2019: GBP54.5m). This resulted in a ratio of permanent
to temporary recruitment of 73:27 (Q4 2019: 73:27).
Headcount
In line with our strategy of protecting our platform and hiring
experienced fee earners, while gross profit for the year was down
28%, fee earner headcount fell only 15%. Having reduced our fee
earner headcount by 169 in Q3, we reduced it at a slower rate in
Q4, down 78. Our operational support headcount fell by 11, and, as
such, our ratio of fee earners to operational support staff was
maintained at 77:23. Overall, the Group had 5,145 fee earners and a
total headcount of 6,694.
Financial Guidance
With COVID-19 continuing to impact the majority of our markets
around the world, particularly with rolling lockdowns now affecting
many countries, it remains too uncertain to estimate the impact on
the Group's operations and, as such, we are unable to provide
financial guidance for 2021 and future years. We will monitor the
situation closely and will provide updates when appropriate, as
well as Trading Updates quarterly.
Geographical Analysis (unless otherwise stated all growth rates
are in constant currency)
All of the Group's regions continued to be impacted by COVID-19
during Q4, resulting in Group gross profit declining 20.2% in
constant currencies, an improvement from -31.9% in Q3. In constant
currencies, Michael Page was down 18.0%, with Page Personnel
declining 25.1% in the quarter.
EMEA Gross Profit (GBPm) Growth Rates
(53% of Group) Reported Constant
---------- ---------- ------------ ------------
Q4 2020 vs. Q4 2019 87.7 103.5 -15.2% -18.6%
---------- ---------- ------------ ------------
2020 vs 2019 318.8 418.3 -23.8% -24.5%
---------- ---------- ------------ ------------
* France (17% of Group) -20%
* Germany (10% of Group) -13%
* Southern Europe -19%
* Italy -21%
* Spain -20%
* Benelux -24%
* Middle East and Africa -27%
Headcount at 31 December 2020: 2,979 (30 September 2020: 3,021)
In Europe, Middle East and Africa, down 24.5% in Q3, the
improvement in trading conditions we experienced at the end of Q3,
with September down 21%, continued into Q4, which was down 18.6%
overall. However, local lockdowns at the end of the year impacted
the December exit rates in some markets, with EMEA overall down 20%
in December. Recruitment in our Michael Page business declined 16%
for the quarter, with Page Personnel down 22%. France declined 20%,
with Michael Page down 17% and Page Personnel down 22%. Germany
delivered another resilient performance, declining 13% in the
quarter, broadly in line with Q3, albeit the December exit rate was
slower at -22% as a result of local lockdowns. Our German
Technology focused Interim business proved the most resilient to
the deterioration in macro-economic conditions, up 3% in 2020.
Southern Europe declined 19%, with Italy down 21% and Spain down
20%, both impacted at the end of the quarter by increased
restrictions. Benelux declined 24%, with the Netherlands and
Belgium impacted to a similar extent. The Middle East and Africa
declined 27%.
Asia Pacific Gross Profit (GBPm) Growth Rates
(20% of Group) Reported Constant
---------- ---------- ------------ ------------
Q4 2020 vs. Q4 2019 34.0 37.4 -9.0% -10.2%
---------- ---------- ------------ ------------
2020 vs 2019 121.1 163.3 -25.8% -25.1%
---------- ---------- ------------ ------------
* Asia (17% of Group) -4%
* Greater China (8% of Group and 47% of Asia) -10%
* Mainland China flat
* Hong Kong -28%
* South East Asia -13%
* Singapore -14%
* India -3%
* Japan +18%
* Australia -26%
Headcount at 31 December 2020: 1,385 (30 September 2020: 1,418)
In Asia Pacific, gross profit for Q4 was down 10.2%. Mainland
China was flat for the quarter and exited December +15%, with
market conditions continuing to improve. The improvement was driven
by our domestic clients, who now represent over half of our
Mainland China business. However, Hong Kong declined 28%, impacted
significantly by COVID-19. Overall, Greater China declined 10% for
the quarter. South East Asia declined 13%, with Singapore down 14%.
Japan was up 18%, a record quarter, exiting December up 26%, with
record performances in Contracting and our Nikkei market business.
India, one of the worst affected countries by COVID-19, declined 3%
for the quarter, up from -32% in Q3, though exited December slower
at -18%. Australia declined 26%, an improvement from -42% in
Q3.
Americas Gross Profit (GBPm) Growth Rates
(14% of Group) Reported Constant
--------- ----------- ------------ ------------
Q4 2020 vs. Q4 2019 22.8 32.3 -29.6% -23.2%
--------- ----------- ------------ ------------
2020 vs 2019 88.8 138.8 -36.0% -31.4%
--------- ----------- ------------ ------------
* North America (8% of Group) -30%
* US -31%
* Latin America (6% of Group) -13%
* Brazil -6%
* Mexico -30%
Headcount at 31 December 2020: 1,155 (30 September 2020: 1,162)
In the Americas, gross profit for Q4 was down 23.2%. The US
declined 31%, as a result of significant disruption from COVID-19
as well as political uncertainty. Trading conditions remained
particularly tough in Construction. In Latin America, gross profit
declined 13%. Brazil was down 6% and Mexico, our largest country in
the region, was down 30%, but improved in December to -22%.
Elsewhere in Latin America, the remaining countries were flat for
the quarter, collectively.
UK Gross Profit (GBPm) Growth Rate
(13% of Group)
---------- ---------- -----------------
Q4 2020 vs. Q4 2019 21.0 31.9 -34.2%
---------- ---------- -----------------
2020 vs 2019 81.0 135.1 -40.1%
---------- ---------- -----------------
* Michael Page -31%
* Page Personnel -43%
* Overall, December -30%
Headcount at 31 December 2020: 1,175 (30 September 2020: 1,182
including 65 furloughed employees)
In the UK, gross profit declined 34.2% in Q4, improving from
-47.9% in Q3. However, conditions remained challenging with
regional lockdowns imposed during the quarter and Brexit related
uncertainty in December. Our Michael Page business was more
resilient than Page Personnel, with declines of 31% and 43%,
respectively. Overall for the quarter, Permanent recruitment was
down 33% with Temporary down 37%.
Financial Position
Save for the effects of Q4 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 30
September 2020. Net cash at 31 December 2020 was in the region of
GBP165m (Q3 2020: GBP152m; Q4 2019: GBP98m).
Shares
At 31 December 2020 there were 328,618,774 Ordinary shares in
issue, of which 12,795,658 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 11,249,646 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 Fourth Quarter and Full Year 2020 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 Full Year results on 3 March 2021.
Enquiries:
PageGroup +44 (0)20 3077 8172
Steve Ingham, 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 9:00am today. The live presentation can
be viewed by following the link:
https://www.investis-live.com/pagegroup/5fda379311f2251100bab9cd/udhs
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 46 63 32 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
13 January 2021 at:
https://www.page.com/presentations/year/2021
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END
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