REG - Michael Page Intl - Second Quarter and First Half 2014 Trading Update <Origin Href="QuoteRef">MPI.L</Origin>
06/09/2014 16:32
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RNS Number : 2905M
Michael Page International PLC
15 July 2014
15
July 2014
SECOND QUARTER AND FIRST HALF 2014 TRADING UPDATE
Growth in all regions in constant currencies
Highlights*
· Q2 Group gross profit growth of 8.9% to £137.2m
· All four regions delivered year-on-year growth
· Strong country performances from major economies: UK, US and China
· Continued focused investment, including increase in fee earner headcount
of 72 in Q2
· FX headwinds impact on Gross profit of £10m in Q2 (£19m total in H1)
*in constant currencies
Q2 GROSS PROFIT ANALYSIS
Reported (£m) Constant
Year-on-year % of Group Q2 2014 Q2 2013 % %
EMEA 40% 54.8 55.0 -0.5% +5.0%
UK 25% 34.8 31.3 +11.1% +11.1%
Asia Pacific 21% 28.3 28.2 +0.6% +14.2%
Americas 14% 19.3 20.6 -6.6% +8.7%
Total 100% 137.2 135.1 +1.5% +8.9%
Permanent 77% 106.1 104.7 +1.3% +9.4%
Temporary 23% 31.1 30.4 +2.4% +7.4%
H1 GROSS PROFIT ANALYSIS
Reported (£m) Constant
Year-on-year % of Group H1 2014 H1 2013 % %
EMEA 41% 107.4 107.1 +0.3% +5.2%
UK 26% 67.6 61.4 +10.1% +10.1%
Asia Pacific 19% 51.3 54.3 -5.5% +7.8%
Americas 14% 37.4 39.1 -4.4% +11.8%
Total 100% 263.7 261.9 +0.7% +7.9%
Permanent 77% 203.7 202.6 +0.5% +8.4%
Temporary 23% 60.0 59.3 +1.2% +6.1%
Commenting, Steve Ingham, Chief Executive Officer, said:
"PageGroup delivered an increase of 8.9% in year-on-year growth in constant
currencies for Q2, with improvement in all four regions. We saw solid
performances across our regions, including strong growth in the major
economies of China, the UK and the US. While adverse FX continues to be a drag
on the reported results, overall the underlying business environment is
gradually improving in a number of our key markets. In reported rates, the
Group gross profit was up 2% on the prior year to £137.2m and up over 8%
sequentially from £126.6m in Q1 2014.
"In our largest region, EMEA, both France and Germany saw modest constant
currency growth over the prior year, and our Southern European markets
performed strongly. The UK grew at over 11% for the quarter reflecting
increasing momentum in the business, especially in technical disciplines and
in Finance & Accounting, although Financial Services remained flat. Asia had
an exceptional quarter, delivering 25% growth on the prior year, including
China up 37% to record levels. Australia continued to stabilise, with Q2 4%
down on the prior year versus down 10% in Q1. The Americas region grew 9% in
the quarter, helped by the US being up 17% against tougher comparators. Latin
America (LatAm) grew 4%, despite Brazil declining 7% as the World Cup impacted
activity levels, with the other 5 countries up 24% collectively.
"We are seeing more instances of candidate shortages in a number of markets
and disciplines. This gives us confidence to continue our investment
programme, both in infrastructure and, selectively, additional fee earners.
As a result, we increased headcount by 72 consultants (2%) during the second
quarter and over 175 for the first half. Support staff headcount accounted
for only 15% of total headcount growth over the same period. We will continue
this investment in people and infrastructure as long as we continue to see the
right market conditions.
"Our infrastructure programme, such as the upgraded website roll-out, which
will make a significant contribution to candidate acquisition in an increasing
number of countries, is progressing well. The roll-out of our new Page
Recruiting System continued to four more of our US offices and in Q3 we expect
this to continue with further roll-outs in the US and UK. We are confident
that such investment puts us in the best position to take advantage of
improving market conditions, as they occur. Likewise, our focus on developing
scale and breadth in under-penetrated markets, and in regions such as LatAm
and Asia where we lead the market, is delivering significant competitive
advantage.
"We have seen an improvement in the performance of all our regions over the
last six months in constant currency, despite challenging economic conditions
in some of our larger countries. Looking ahead, we expect to see market
conditions remaining variable in Brazil and France and for Australia to become
increasingly stable. The more positive environment in many of our other
countries, both large and small, is expected to continue, with our leading
KPIs positive as we start the second half. For the full year, if the current
trend of improving growth rates is maintained, we continue to expect to
perform in line with our expectations as outlined at the time of the first
quarter results."
Enquiries:
PageGroup +44 (0)20 3077 8425
Steve Ingham, Chief Executive Officer
Kelvin Stagg, Chief Financial OfficerRoss Hawley, Director of Investor Relations
FTI Consulting +44 (0)20 3727 1340
Richard Mountain / Susanne Yule
PageGroup will be presenting these results at 9.00am today. The presentation
and a recording of the meeting will be available on PageGroup's website later
on today at:
ttp://www.pagegroup.co.uk/investors/reports-and-presentations/presentations-and-webcasts/2014.aspx
A conference call facility is available for analysts and investors unable to
attend, details of which are below:
Link:
ttp://www.axisto-live.com/investis/clients/pagegroup/presentations/53b2d99d1991941318708087/q2-2014-trading-update
Dial in number:
+44 (0)20 3059 8125
Password: PageGroup or Michael Page
PageGroup will issue its interim results on 13 August 2014 and Third Quarter
Interim Management Statement on 14 October 2014.
Group Trading Update
Michael Page International plc ("PageGroup") grew by 9% in constant currencies
and all regions were positive. Adverse FX movements meant that our quarterly
gross profit was approximately £10m lower in reported rates, with the Group
delivering second quarter gross profit of £137.2m, up 2%.
Perm/Temp mix
The ratio of permanent to temporary recruitment remained at 77:23. In constant
currencies, permanent recruitment grew 9% and temporary recruitment grew at 7%
on the prior year. This profile was similar for the first half of 2014, with
permanent and temporary recruitment up 8% and 6% respectively. In most
countries where PageGroup has both temporary and permanent businesses, the
temporary business continues to grow more strongly, but the overall ratio
reflects the fact that in key growth markets such as in LatAm and China, there
are fewer or no temporary placements made.
Discipline analysis
Q2 Reported (£m) Constant
Year-on-year gross profit % of Group Q2 2014 Q2 2013 % %
Finance & Accounting 40% 55.0 55.4 -0.8% +6.1%
Engineering, Property & Construction, Procurement & Supply Chain 21% 28.2 26.8 +5.1% +13.0%
Legal, Technology, HR, Secretarial, Healthcare 20% 28.2 27.8 +1.2% +9.3%
Marketing, Sales & Retail 19% 25.8 25.1 +3.1% +10.6%
Total 100% 137.2 135.1 +1.5% +8.9%
Half Year Reported (£m) Constant
Year-on-year gross profit % of Group H1 2014 H1 2013 % %
Finance & Accounting 40% 104.4 107.4 -2.8% +3.5%
Engineering, Property & Construction, Procurement & Supply Chain 21% 54.5 52.0 +4.8% +12.8%
Legal, Technology, HR, Secretarial, Healthcare 20% 53.9 54.0 -0.2% +7.8%
Marketing, Sales & Retail 19% 50.9 48.5 +4.9% +12.4%
Total 100% 263.7 261.9 +0.7% +7.9%
Geographical analysis
Country highlights*:
· All major EMEA countries saw positive growth; 10 countries in region
grew over 10%
· UK up 11% driven by Finance & Accounting, and technical disciplines
· Greater China up 37%: strong performances across all offices
· Australia decline slowed to -4% in Q2 from -10% in Q1
· US up 17%, continuing strong momentum but now with tougher comparables
· LatAm: Brazil down 7%, the other 5 markets delivered strong growth
(+24%)
* in constant currencies
EMEA Gross Profit (£m) Growth rates
(40% of Group in Q2 2014) Reported Constant
Q2 2014 vs. Q2 2013 54.8 55.0 -0.5% +5.0%
Q2 2014 vs. Q1 2014 54.8 52.6 +3.9% +5.0%
H1 2014 vs. H1 2013 107.4 107.1 +0.3% +5.2%
Headcount at 30 June 2014: 2,036 (31 March 2014: 2,002)Gross profit in constant currencies:· France (14% of Group) +3% on Q2 '13· Germany (6% of Group) +7% on Q2 '13
The EMEA region experienced mixed market conditions in the quarter similar to
Q1, with the quarterly growth rate holding constant at 5%. France, our largest
market in the region, was up 3% in constant currency, with Page Personnel
France (63% of France) growing 11%. Germany saw gross profit up 7% in constant
currency, with its Page Personnel business performing particularly well.
Spain, Italy and Turkey were each up around 15%, reflecting improving
conditions in Southern Europe. The Middle East produced a record result in Q2
and now accounts for approximately 4% of the EMEA region. Fee earner headcount
growth in EMEA was 79 during the quarter, including in Southern Europe and the
Middle East.
UK Gross Profit (m) Growth rates
(25% of Group in Q2 2014)
Q2 2014 vs. Q2 2013 34.8 31.3 +11.1%
Q2 2014 vs. Q1 2014 34.8 32.8 +6.2%
H1 2014 vs. H1 2013 67.6 61.4 +10.1%
Headcount at 30 June 2014: 1,361 (31 March 2014: 1,350)
The UK increased its gross profit growth rate to 11% for the quarter and over
10% for the first half (Q1: 8%). The business continued to experience positive
momentum and greater confidence both in London and the regions and there were
increasing instances of candidate shortages in certain disciplines. Excluding
Financial Services, Finance & Accounting (+17%) and technical disciplines such
as Property & Construction (+28%) maintained their momentum from the first
quarter. Page Personnel grew by 20% year-on-year, and was up 17% for the first
half. Fee earner headcount was up 5 in the quarter with most of the gross
profit growth being generated through consultant productivity gains.
Asia Pacific Gross Profit (£m) Growth rates
(21% of Group in Q2 2014) Reported Constant
Q2 2014 vs. Q2 2013 28.3 28.2 +0.6% +14.2%
Q2 2014 vs. Q1 2014 28.3 23.0 +23.4% +23.5%
H1 2014 vs. H1 2013 51.3 54.3 -5.5% +7.8%
Headcount at 30 June 2014: 1,114 (31 March 2014: 1,112)Gross profit in constant currencies:· Asia (14% of Group and 68% of Asia Pacific) +25% on Q2 '13· Greater China (57% of Asia) +37% on Q2 '13 · Australia and New Zealand (7% of Group and 32% of Asia Pacific) -3% on Q2 '13
The Asia Pacific region grew over 14% in Q2 on the prior year and 8% in the
first half in constant currency. Within this, Asia grew by 25% in constant
currency, reflecting positive economic conditions and the increasing
experience and ability of our local consultants to capture market
opportunities. Greater China saw record growth of 37%, with our businesses in
Northern & Eastern China such as Shanghai and Beijing up over 40%, and strong
elsewhere including Hong Kong. Japan and SE Asia performed strongly, including
Malaysia up over 20%. Both Malaysia and Japan achieved record quarters. The
Australian market stabilised further, and was down 4% in constant currency,
compared to down 10% in Q1. Fee earner headcount in the region was flat on
Q1.
Americas Gross Profit (£m) Growth rates
(14% of Group in Q2 2014) Reported Constant
Q2 2014 vs. Q2 2013 19.3 20.6 -6.6% +8.7%
Q2 2014 vs. Q1 2014 19.3 18.1 +6.3% +5.8%
H1 2014 vs. H1 2013 37.4 39.1 -4.4% +11.8%
Headcount at 30 June 2014: 826 (31 March 2014: 821)Gross profit in constant currencies:· Latin America (8% of Group) +4% on Q2 '13· Brazil (58% of LatAm) -7% on Q2 '13 and -4% on Q1 · North America (6% of Group) +16% on Q2 '13
The Americas region saw gross profit up 9% in constant currencies for the
quarter and 12% for the first half, helped by growth in North America and in
countries such as Mexico, Chile and Colombia. The US again grew strongly
(+17%), even with tougher 2013 comparables. Canada was also up over 10%.
Brazil was 7% lower than the prior year due to the expected impact of the
World Cup. Excluding Brazil, the other countries in the region (42% of LatAm)
were up over 24%. Fee earner headcount in the region reduced slightly in the
quarter, but was broadly stable in the first half, although mixed across the
region reflecting our revenue growth rates.
Financial Position
Other than the effects of trading in the first half, together with £25m share
purchases into the Employee Benefit Trust ("EBT") and the payment of a final
dividend of £22.2m for 2013, there have been no significant changes in the
financial position of the Group since the publication of the results for the
year ended 31 December 2013. Net cash at 30 June 2014 was approximately £41m
(31 March 2014: £76m).
PageGroup will issue its interim results for the six months ending 30 June
2014 on 13 August 2014, followed by its Third Quarter 2014 Interim Management
Statement on 14 October 2014.
Shares
At 30 June 2014 there were 321,506,690 Ordinary shares in issue, of which
17,517,985 were held by the EBT. The rights to receive dividends and to
exercise voting rights have been waived by the EBT over 15,409,431 shares and
consequently these shares should be excluded when calculating earnings per
share. The total number of voting rights in the Company is 321,506,690.
Cautionary statement
This Second Quarter and First Half 2014 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.
This information is provided by RNS
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