PageGroup slashes profit outlook as workers turn down job offers

PageGroup cut its annual forecast due to a reduction in employers hiring and more job seekers turning down offers.

The recruitment specialist now expects to make operating profits of £125m to £130m this year, compared with previous guidance of £137.6m and a £5m discount in one-off cost-cutting measures.

In the third quarter of 2023, the company said gross profits fell 7.9% on a constant currency basis to £242.2m as strong part-time hiring levels were offset by the continued market downturn of permanent employment.

A better deal: PageGroup said more job seekers are turning down job offers through employer buyouts — counter offers made by companies to try to convince employees to stay

Although labor shortages are still encouraging businesses to implement wage increases, Surrey-based PageGroup said the pace of wage increases has slowed compared to last year.

More job applicants are turning down job offers driven by employer buyouts – counter offers made by companies to try to convince staff to stay.

These challenging market conditions particularly affected PageGroup’s UK division, which reported a fall in gross profits of 18.9 per cent to £30.3m in the three months to September.

Profits from the Asia-Pacific region also fell sharply, mainly due to the real estate crisis and low consumer spending slowing China’s economic recovery.

And they fell by a quarter in the United States, although the country’s labor market and economy remained relatively resilient.

Nicholas Kirk, chief executive of PageGroup, warned that there was an “increased degree of uncertainty” in the short term due to the slow end to the last quarter.

But he added: “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 quickly to meet market conditions.

“Given these fundamental strengths, we believe we will continue to perform well in these challenging markets and are confident in our ability to deliver on our new strategy driving the group’s long-term profitability.”

PageGroup shares fell 3.6 percent to 408.8 pence by early afternoon on Wednesday, making them the top five decliners on the FTSE 250 index.

PageGroup’s results come a day after peer Robert Walters also reported a significant drop in profitability in the third quarter.

The white-collar specialist revealed that net fee income was down 13 per cent as a result of weaker performance across all markets, with UK trading hit by tougher conditions in the technology and financial services sectors.

Along with other recruitment firms, PageGroup and Robert Walters have cut headcount in response to a softer job market.

The former has cut about 1,000 positions over the past 12 months, while the latter has cut 156 positions since the end of last December.

It marks a dramatic departure from the period following the gradual easing of Covid-related restrictions, when UK recruiters began a hiring boom as the global labor market recovered.