Recruiter PageGroup cautions about lower profits

PageGroup warned of a slump in earnings as it continued to be impacted by weak economic confidence and a slowdown in the hiring market.

The Surrey-based recruiter now expects to report an operating profit of around £140m in 2023, in line with consensus forecasts, up from last year’s record £196.1m.

Its CEO, Nicholas Kirk, said employers were taking longer to hire new talent, while employees were becoming “unwilling” to take a job.

For the first three months of this year, the company revealed that gross profits were up just 1.8 percent to £262.7 million, though they were down 2.4 percent on a constant currency basis.

This is despite the fact that the FTSE 250 business posted its best ever performance in the EMEA region, the source of more than half of its revenues, thanks to record results in Germany, Spain, Turkey and Belgium.

Profits from the Asia-Pacific market fell 17 percent, mainly due to difficult trading conditions in China, where Covid-19 infections have risen following the easing of draconian lockdown restrictions.

They also declined in the UK, with modest growth in the administration-focused Page Personnel business offset by a 14 percent decline in the Michael Page business, and in the United States amid weakness in the technology and banking sector.

As its rival Hays reported last week, PageGroup said companies have increasingly turned to temporary recruiting due to more challenging market conditions.

Successive interest rate hikes by central banks and skyrocketing energy prices due to Ukraine’s large-scale invasion of Russia and the rebound in travel have created huge additional costs for employers.

As a result, many companies have imposed hiring freezes or job cuts, including recruiters such as PageGroup.

The company reduced its fee earner roster by just over 300 in the quarter, reducing headcount in all regions after hiring hundreds of additional employees last year.

Nicholas Kirk said: “There remains a high level of global macroeconomic and political uncertainty in most of our markets. Against this background, however, we still see a shortage of candidates and a good number of vacancies.’

Companies have struggled to attract new employees in recent years amid a “major layoff” of workers seeking higher pay and better benefits.

Many have offered significant pay raises to attract or retain talent, providing a significant financial advantage to UK headhunters, whose income is typically based on the percentage of a successful candidate’s annual salary.

PageGroup Shares were 0.4 percent higher Monday morning at 455.6 pence and have grown by more than a third over the past three years.