- Lukewarm first-quarter update follows weak end to 2023
- UK still very soft
- Temporary hires now showing weakness, as well as permanent ones
- Recruiter itself has cut jobs
“A weak start to 2024 is weighing on the shares of recruitment specialist PageGroup, whose first-quarter trading update is showing no real sign of improvement in global job markets, with the UK in particular turning any corner rather slowly,” says AJ Bell investment director Russ Mould. “However, the FTSE 250 index member’s shares are retreating from levels near their one-year high and these figures probably reflect decisions taken several months back, given the lengthy lead times involved in headcount changes by employers, so the picture may not be quite as bleak as it seems.
“Investors will now look to trading updates from peers Robert Walters on Tuesday and Hays on Wednesday, and a trio of weak statements could help to justify the interest rate cuts for which financial markets continue to hope, even if inflation is proving sticky, to leave the Bank of England with an awkward juggling act.
“The year-on-year change in gross profit, or net fee income, got worse at PageGroup for the ninth quarter in a row between January and March of this year.
Source: Company accounts
“None of the company’s geographic areas showed any sign of improvement in momentum and the UK remains an area of particular weakness.
Source: Company accounts
“It will be of particular concern to the company’s shareholders, and perhaps economists and policymakers, that temporary hires are now also coming under pressure. Fee income fell year-on-year for the first time since the pandemic. Usually employers will focus on full-time hires if they are feeling confident and temporary ones if they have less visibility, so retrenchment in part-time posts is a potentially troubling sign.
Source: Company accounts
“PageGroup itself has responded to these tougher times. A 2% quarter-on-quarter cut in fee earner headcount takes the total to 5,751, the lowest mark since the pandemic-blighted second quarter of 2021 and 14% below the level of a year ago.
Source: Company accounts
“The good news here, though, is that chief executive Nicholas Kirk and the board are not planning any further substantial reduction in headcount.
“Moreover, analysts are already expecting a weak 2024 for the company. The consensus estimate for pre-tax profit this year is £103 million, compared to 2023’s £119 million. That forecast has seeped lower from £129 million back in January, when Mr Kirk issued a mild profit warning after a soggy end to 2023, and implies a second straight drop in annual profits.”
Source: Company accounts, Marketscreener, consensus analysts’ forecasts
