PageGroup’s profits are hit by the global hiring slowdown
- PageGroup said fourth-quarter gross profit fell 12.9% to £196 million
- Economic uncertainty continued to negatively impact candidate and client confidence
PageGroup has warned that annual profits will be at the lower end of forecasts as economic weakness continues to weigh on the global labor market.
The recruiter’s gross profit fell 12.9 percent at constant exchange rates to £196 million in the fourth quarter of last year, due to weaker performance across all regions.
Profits fell fastest in the Europe, Middle East and Africa region, by 15.9 percent to £107.5 million, with double-digit percentage declines recorded in France, Italy, Germany and the Netherlands.
Gross profits in Britain shrank 13.6 percent to £24.3 million, while they fell by more than a quarter in mainland China, where the economy has slowed significantly due to weak consumer demand and a crisis in the the real estate market.
PageGroup said macroeconomic uncertainty in most countries continued to impact candidate and client confidence.
While salary levels have remained high, customers have become more ‘risk averse’ as recruitment budgets have tightened, causing companies to take longer to hire new staff.
Redundancy: PageGroup has warned that annual profits will be at the lower end of forecasts as economic weakness continues to weigh on the global labor market
In response, the company has reduced its workforce by 130 employees to 5,370 in the final three months of 2024, mainly through layoffs in the UK and Europe.
It expects to incur one-off losses of an estimated £5 million from the closure of its shared service centers in the UK and Singapore, with operations transferred to Barcelona, Buenos Aires and Kuala Lumpur.
As a result, the company now expects 2024 operating profits to be at the lower end of the market consensus range of £49m to £58.5m.
PageGroup shares were down 3.7 per cent at 300p by early afternoon, making them the FTSE 250’s second-biggest faller after Wizz Air.
Nicholas Kirk, CEO of PageGroup, said: ‘A high level of macroeconomic and geopolitical uncertainty remains across the majority of our markets.
“However, we have a diversified and adaptable business model, a highly experienced management team, a strong balance sheet, and our cost base is under constant review.”
He added: ‘Given the group’s fundamental strengths and despite the challenging environment, we are confident in our ability to implement our strategy, driving the group’s long-term profitability.’
British recruitment firms have cut their own workforces in recent years, partly due to interest rate hikes by central banks, making borrowing more expensive for companies looking to expand.
The technology sector is leading the way in layoffs as people have spent less time online following the end of Covid-related restrictions.
Russ Mould, investment director at AJ Bell, said: ‘Given that recruitment is an area that could provide a warning signal for the wider economy, the consistent questionable performance of PageGroup and its peers is less than encouraging.’
He added: ‘Given the uncertainty, it is difficult to see where any improvement could come from in the short term.’
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