TIDMPAGE
RNS Number : 6079Z
PageGroup plc
15 January 2024
15 January 2024
RESILIENT PERFORMANCE IN CHALLENGING MARKET CONDITIONS
Q4 Highlights*
-- Group gross profit of GBP237.3m, -8.9% vs. 2022
-- Slower exit to the quarter with continued weakness in client and candidate confidence
-- EMEA -6.1%: France -5%; Germany -6%
-- Americas -8.0%: US -24%; Latin America +11%**
-- Asia Pacific -10.3%: Greater China -8%; SE Asia -14%; Japan -7%; India +16%
-- UK -19.9%: Michael Page -23%; Page Personnel -15%
-- Decrease in fee earner headcount of 224 to 5,851 (Q4 2022: 6,943)
-- Strong cash position, net cash of c. GBP90m (Q3 2023: c. GBP136m, Q4 2022: c. GBP131m)
-- 2023 full year operating profit expected to be slightly below
previous guidance of GBP120m - GBP125m***
* In constant currencies vs 2022 except where stated
otherwise
** Excluding Argentina due to hyperinflation following the
election
*** After previously announced restructuring charge of c.
GBP5m
Q4 Gross Profit Analysis
Reported (GBPm) Constant
Year-on-year % of Group Q4 2023 Q4 2022 % %
----------- -------- -------- ------- ---------
EMEA 56% 132.4 141.7 -6.5% -6.1%
----------- -------- -------- ------- ---------
Americas 17% 40.4 46.5 -13.2% -8.0%
----------- -------- -------- ------- ---------
Asia Pacific 15% 35.9 43.0 -16.4% -10.3%
----------- -------- -------- ------- ---------
UK 12% 28.6 35.7 -19.9% -19.9%
----------- -------- -------- ------- ---------
Total 100% 237.3 266.9 -11.1% -8.9%
----------- -------- -------- ------- ---------
Permanent 70% 165.4 197.7 -16.3% -13.9%
----------- -------- -------- ------- ---------
Temporary 30% 71.9 69.2 +3.9% +5.2%
----------- -------- -------- ------- ---------
Full Year Gross Profit Analysis
Reported (GBPm) Constant
Year-on-year % of Group 2023 2022 % %
----------- -------- -------- ------- ---------
EMEA 55% 548.8 538.5 +1.9% +0.2%
----------- -------- -------- ------- ---------
Americas 17% 172.7 193.4 -10.7% -9.5%
----------- -------- -------- ------- ---------
Asia Pacific 16% 159.6 195.3 -18.3% -14.3%
----------- -------- -------- ------- ---------
UK 12% 124.9 149.1 -16.2% -16.2%
----------- -------- -------- ------- ---------
Total 100% 1,006.0 1,076.3 -6.5% -6.4%
----------- -------- -------- ------- ---------
Permanent 73% 732.9 826.3 -11.3% -11.0%
----------- -------- -------- ------- ---------
Temporary 27% 273.1 250.0 +9.2% +8.7%
----------- -------- -------- ------- ---------
Nicholas Kirk, Chief Executive Officer, PageGroup, said:
"We produced a resilient performance in challenging market
conditions. Despite the year-on-year decline in gross profit, we
are still seeing good activity levels, albeit we did see a
deterioration in job flow through Q4. However, these activity
levels are not all converting into gross profit due to ongoing
lower levels of candidate and client confidence.
"Looking ahead, macro-economic uncertainty persists. However, 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 rapidly to match market conditions. Given these
fundamental strengths, we believe we will continue to perform well
in these challenging markets, and we are confident in our ability
to implement our new strategy driving the long-term profitability
of the Group. We are also seeing the benefits from our investments
in innovation and technology, where Customer Connect is supporting
productivity and enhancing customer experience, and Page Insights
is providing real time data to inform business decisions."
Trading Summary
Group gross profit declined 8.9% in constant currencies against
Q4 2022, which was a 10% softer comparator than Q3. Trading
conditions in Asia, the UK or the US saw no improvement, while
trading conditions deteriorated in Europe. We experienced a slower
end to the quarter as customer uncertainty was compounded by the
proximity to year end salary reviews and bonuses, which combined to
make trading particularly challenging.
The tougher market conditions at the end of Q3 continued into
Q4, as low levels of client and candidate confidence continued to
delay time to hire, particularly in permanent recruitment. As
clients' recruitment budgets have tightened, they have become more
risk averse which has slowed the recruitment process. Although
salary levels remain strong, offers made to candidates are not as
elevated as they were in 2022.
However, against this backdrop activity levels remained good,
albeit we did see a deterioration in job flow through Q4. We also
experienced acute shortages of highly skilled candidates in nearly
all our markets, which continued to support high fee rates.
Reflecting the uncertain macro-economic conditions, temporary
recruitment (+5%) continued to outperform permanent (-14%), as
clients sought more flexible options. In line with these
conditions, we reduced our fee earner headcount by 224 (-3.7%) with
action taken in all regions. This followed similar headcount
reductions in the previous four quarters. From the peak of 7,071 at
the end of Q3 2022, we have reduced our fee earner headcount by
1,220 (17.3%) to the end of Q4 2023. Productivity, measured as
gross profit per fee earner, was up 8% versus Q4 2022, as a result
of our action on fee earner headcount over the past 12 months.
Geographical Analysis (unless stated otherwise all growth rates
are vs. 2022 and in constant currency)
EMEA Gross Profit (GBPm) Growth Rates
(56% of Group) 2023 2022 Reported Constant
----------- --------- ------------- -------------
Q4 132.4 141.7 -6.5% -6.1%
----------- --------- ------------- -------------
FY 548.8 538.5 +1.9% +0.2%
----------- --------- ------------- -------------
Q4
* France (15% of Group) -5%
* Germany (13% of Group) -6%
* Benelux -6%
o Belgium -2%
o Netherlands -6%
* Southern Europe -7%
o Italy -11%
o Spain -4%
* Middle East and Africa -5%
Headcount at 31 December 2023: 3,814 (30 September 2023: 3,900)
In Europe, Middle East and Africa, gross profit declined 6.1% to
GBP132.4m. This was a weaker performance than the decline of -1.3%
in Q3, despite a softer comparator in Q4. We also saw a slower end
to the quarter. France declined 5%, with continued weakness in
candidate and client confidence, particularly within Michael Page.
Reflecting the uncertainty in the market, temporary recruitment
(+10%) was more resilient than permanent (-15%). Germany declined
6%, with tougher conditions within permanent recruitment in Michael
Page. Our Technology focused Interim business continued to show
resilience, up 7%. Elsewhere in the region, the tougher conditions
we experienced at the end of Q3 continued into Q4, with the
majority of countries declining year-on-year. We reduced our fee
earner headcount by 84 in Q4, which was broadly in line with the
reductions in the previous two quarters.
Americas Gross Profit (GBPm) Growth Rates
(17% of Group) 2023 2022 Reported Constant
----------- --------- ------------- -------------
Q4 40.4 46.5 -13.2% -8.0%
----------- --------- ------------- -------------
FY 172.7 193.4 -10.7% -9.5%
----------- --------- ------------- -------------
Q4
* North America (9% of Group) -24%
o US -24%
* Latin America (8% of Group) +18%
o Mexico -6%
o Brazil +20%
Headcount at 31 December 2023: 1,329 (30 September 2023: 1,373)
In the Americas, we delivered gross profit of GBP40.4m, down
8.0% against Q4 2022. The US declined 24%, broadly in line with Q3.
Conditions remained challenging, with uncertainty affecting both
candidate and client confidence. Conditions were particularly tough
within Accounting & Financial Services, while Property &
Construction was more resilient. In Latin America, gross profit
grew 18%, despite political and macro-economic uncertainty across
the region. This was also partially due to hyperinflation in
Argentina following the recent election; excluding this the growth
rate was 11%. Mexico, our largest country in the region, was down
6%, broadly in line with Q3, whereas Brazil was up 20%. Elsewhere
in Latin America, the remaining countries grew 22%, collectively.
Overall fee earner headcount decreased by 35, mainly in Latin
America, as we held on to our more experienced fee earner headcount
in the US.
Asia Pacific Gross Profit (GBPm) Growth Rates
(15% of Group) 2023 2022 Reported Constant
----------- --------- ------------- -------------
Q4 35.9 43.0 -16.4% -10.3%
----------- --------- ------------- -------------
FY 159.6 195.3 -18.3% -14.3%
----------- --------- ------------- -------------
Q4
* Asia (12% of Group) -6%
* Greater China (4% of Group and 35% of Asia) -8%
o Mainland China flat
o Hong Kong -12%
* South East Asia -14%
* India +16%
* Japan -7%
* Australia -24%
Headcount at 31 December 2023: 1,552 (30 September 2023: 1,624)
In Asia Pacific, gross profit for Q4 was down 10.3% against 2022
to GBP35.9m. Greater China declined 8%, with Mainland China flat.
The improvement in the growth rate from Q3 was due to the softer
comparators in Q4. Hong Kong declined 12% for the quarter. South
East Asia declined 14%, broadly in line with Q3, with Singapore,
which continues to be impacted by uncertainty related to China,
down 14%. India delivered the standout performance, up 16%. Japan
declined 7%, a deterioration on the growth of 4% in Q3. Australia
was -24% for the quarter, with uncertainty from both clients and
candidates. Our fee earner headcount in the region decreased by 54,
mostly in Australia and Japan, as we held on to our more
experienced fee earner headcount in China.
UK Gross Profit (GBPm) Growth Rate
(12% of Group) 2023 2022
---------- ---------- --------------------
Q4 28.6 35.7 -19.9%
---------- ---------- --------------------
FY 124.9 149.1 -16.2%
---------- ---------- --------------------
Q4
* Michael Page -23%
* Page Personnel -15%
Headcount at 31 December 2023: 1,164 (30 September 2023: 1,243)
In the UK, gross profit for Q4 declined 19.9% against 2022 to
GBP28.6m. This was broadly in line with Q3, and we continued to see
clients deferring hiring decisions and candidates becoming
increasingly cautious about accepting offers. Reflecting the
continued challenging trading conditions, our fee earner headcount
reduced by 50 in Q4 and is now 20% lower than Q4 2022.
Perm/Temp mix
Gross profit from permanent recruitment decreased 16.3% in
reported rates and 13.9% in constant currencies to GBP165.4m (Q4
2022: GBP197.7m). Gross profit from temporary recruitment increased
3.9% in reported rates and 5.2% in constant currencies to GBP71.9m
(Q4 2022: GBP69.2m). This resulted in a ratio of permanent to
temporary recruitment of 70:30 (Q4 2022: 74:26).
Headcount
We reduced our fee earner headcount by 224 (3.7%) during Q4,
with reductions made across all regions. Our non-operations
headcount fell by 57 in Q4, in line with the reduction in fee
earner headcount. Overall, the Group had 5,851 fee earners and a
total headcount of 7,859.
Foreign Exchange
Foreign exchange movements had a negative impact on the Group's
results in Q4, decreasing our Q4 reported gross profit by 2.2
percentage points, or GBP5.7m.
Financial Position
Save for the effects of Q4 trading detailed above and the
payments of the 2023 interim and special dividends of GBP66.2m on
13 October 2023, 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 2023. Net cash at 31
December 2023 was c. GBP90m (Q3 2023: c. GBP136m, Q4 2022: c.
GBP131m).
Shares
At 31 December 2023 there were 328,618,774 Ordinary shares in
issue, of which 14,883,172 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 13,236,001 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 2023 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 7 March 2024.
Enquiries:
PageGroup +44 (0)19 3226 4022
Nicholas Kirk, 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 8.30am today. The live presentation can
be viewed by following the link:
https://www.investis-live.com/pagegroup/6581737db2f6c90d00051324/erqaw
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 91 08 77 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
15 January 2024 at:
https://www.page.com/presentations/year/2024
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END
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