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PageGroup delivers record quarterly gross profit despite slump in UK recruitment

Last updated: 23:55 11 Apr 2018 AEST, First published: 16:30 11 Apr 2018 AEST

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Growth was driven by the European, Middle East and Africa region

Recruitment firm PageGroup PLC (LON:PAGE) achieved record quarterly gross profit as growth in international markets offset another weak performance in the UK and the impact of an earlier Easter.

Gross profit in the first quarter rose 10.3% at actual foreign exchange rates to £187.7mln. Excluding a £3mln impact from exchange rates, gross profit increased 12.3% at constant currencies.

The European, Middle East and Africa (EMEA) division led the growth with a 20.4% jump in gross profit to £94.7mln, boosted by a record quarter in Germany. The EMEA accounts for 50% of total gross profit.

The UK job market, however, continued to be weighed down by macroeconomic uncertainty surrounding the Brexit vote. An earlier Easter this year compared to 2017 also affected the company's performance in the nation. Gross profit in the UK fell 7.1% to £33.8mln, representing 18% of the total.

READ: PageGroup shares drop as it issues cautious outlook about UK jobs market

In the Asia Pacific region, gross profit grew 6.7% to £32.9mln while the Americas delivered an 8.4% rise to £26.3mln.

Gross profit in permanent recruitment rose 11.3% to £142.1mln while temporary recruitment edged up 7.2% to £45.6mln.

PageGroup remains cautious about geopolitical issues

"We are pleased with the strong group performance in Q1, which was achieved despite the timing of Easter, and we are encouraged by the growth seen in the majority of our markets,” said chief executive Steve Ingham.

“However, a number of macro-economic uncertainties remain, including Brexit in the UK, challenges in Catalonia, potential impact from strikes in France, and Brazil's forthcoming elections. Looking ahead, we will continue to focus on driving profitable growth, while being able to respond quickly to any changes in market conditions.”

The group left its full year guidance for operating profit of £132mln unchanged. 

Liberum ups target price but cautious on upgrade potential

Liberum upped its target price to 560p from 515p while maintaining a 'Hold' rating, citing gross profits and cash conversion that were above expectations in the first quarter trading update as the main positive.  

However, the broker was cautious in its outlook for the firm, saying: "reflecting a number of near-term uncertainties, including in the UK, management has looked to manage FY18 expectations and as a result we see limited scope for upgrades in the short-term.

"This outlook combined with a premium valuation leads us to reiterate our HOLD rating. Of the large cap recruiters our preference remains for Hays (BUY, TP 215p) given its greater discipline diversity and exposure to the more defensive contract market."

Shares dipped 1.4% to 542.5p in late-afternoon trading. 

--Adds share price and broker comment--

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