REG - PageGroup plc - Fourth Quarter 2024 Trading Update

PagegroupAnnouncement

13/01/2025 07:00

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RNS Number : 9780S  PageGroup plc  13 January 2025

 

13 January 2025

FOURTH QUARTER 2024 TRADING UPDATE

 

ONGOING CHALLENGING MARKET CONDITIONS, WORSENING IN EUROPE

 

Q4 Highlights*

 

·    Group gross profit of £196.7m, -13.0% vs. 2023 (-17.2% in reported
rates)

·    Ongoing challenging market conditions across the Group, further
worsening in Europe

·    Continued subdued levels of client and candidate confidence impacting
decision making

·    EMEA -15.9%: France -17%; Germany -23%

·    Americas -5.5%**: US +3%; Latin America -14%**

·    Asia Pacific -14.6%: SE Asia -4%; Greater China -23%; Japan -6%;
India -7%

·    UK -13.6%: Michael Page -9%; Page Personnel -22%

·    Decrease in fee earner headcount of 130 (-2.4%) to 5,370 (Q3 2024:
5,500)

·    Productivity down 5% on Q4 2023

·    Net cash of c. £95m (Q3 2024: c. £93m, Q4 2023: c. £90m)

 

2024 Full Year

 

·    The Board expects 2024 full year operating profit, after one-off
costs of c. £5m relating to the closure of our Shared Service Centres in the
UK and Singapore, to be towards the lower end of the current market consensus
range of £49m - £58.5m

 

* In constant currencies vs 2023 except where stated otherwise

** Excluding Argentina due to hyperinflation

 

Q4 Gross Profit Analysis

 

                           Reported (£m)             Constant
 Year-on-year  % of Group  Q4 2024  Q4 2023  %       %
 EMEA          55%         107.5    132.8    -19.1%  -15.9%
 Americas      18%         35.4     40.8     -13.2%  -5.5%**
 Asia Pacific  15%         29.5     35.8     -17.4%  -14.6%
 UK            12%         24.3     28.1     -13.6%  -13.6%
 Total         100%        196.7    237.5    -17.2%  -13.0%

 Permanent     70%         137.4    165.2    -16.8%  -12.5%
 Temporary     30%         59.3     72.3     -18.0%  -14.2%

 

Full Year Gross Profit Analysis

 

                           Reported (£m)            Constant
 Year-on-year  % of Group   2024   2023     %       %
 EMEA          55%         462.6   549.5    -15.8%  -13.4%
 Americas      18%         149.0   173.3    -14.0%  -9.9%**
 Asia Pacific  15%         126.5   159.6    -20.8%  -16.9%
 UK            12%         104.4   124.7    -16.3%  -16.3%
 Total         100%        842.5   1,007.1  -16.4%  -12.9%

 Permanent     72%         606.1   733.6    -17.4%  -13.9%
 Temporary     28%         236.4   273.5    -13.6%  -10.1%

 

 

 

Nicholas Kirk, Chief Executive Officer, PageGroup, said:

 

"Market conditions remained challenging in Q4 and whilst most markets were
sequentially stable, we experienced a further worsening in Europe,
particularly in our two largest markets, France and Germany. The conversion of
interviews to accepted offers remains the most significant area of challenge
as the ongoing macro-economic uncertainty continues to impact candidate and
client confidence, also extending the time-to-hire.

"We continue to review our fee earner headcount, making progress on our
strategy by reallocating resources into the areas of the business where we see
the most significant long-term structural opportunities, as well as ensuring
it remains aligned to activity levels we are seeing in each of our markets. We
drove further efficiencies in the organisation through the closure of our
Shared Service Centres in the UK and Singapore, with transition of activities
into Barcelona, Buenos Aires and Kuala Lumpur. Overall, our focus remains to
balance near term productivity with ensuring we remain well placed to take
advantage of opportunities when market conditions improve.

"Looking ahead, a high degree of macro-economic and geopolitical uncertainty
remains across the majority of our markets, notably in France and Germany.
However, we have a diversified and adaptable business model, a highly
experienced management team, a strong balance sheet and our cost base is under
continuous review.

"We continue to see the benefits of our investments in innovation and
technology. Customer Connect is supporting productivity and enhancing customer
experience, Page Insights is providing real time data to inform business
decisions for both Page and our customers, and we continue to work with our
partners to deploy AI and automation tools into our working environment. Given
the Group's fundamental strengths and despite the challenging environment, we
are confident in our ability to implement our strategy, driving the long-term
profitability of the Group."

Trading Summary

 

Group gross profit declined 13.0% in constant currencies against Q4 2023. We
continued to see tough market conditions in the majority of the Group's
markets, with further worsening in Europe.

 

Although salary levels remain strong, offers made to candidates are not as
elevated as they were in 2022 and early 2023. As a consequence, conversion of
interviews to accepted offers remains the most significant challenge. While
our fee rates remain at high levels, as clients' recruitment budgets have
tightened, they have become more risk averse which has continued to slow the
recruitment process, impacting time-to-hire.

 

During periods of market uncertainty, clients often seek more flexible options
in temporary recruitment. However, we saw similar declines across temporary
recruitment (-14%) and permanent (-13%) in Q4. This was due to softer activity
and trading in our European businesses, where we have a higher proportion of
non-perm business, as well as a tougher comparator in temporary recruitment.
Our reduction in fee earner headcount was broadly consistent with Q3, down 130
(-2.4%), with reductions mainly in Europe and the UK. Productivity, measured
as gross profit per fee earner, was down 5% versus Q4 2023, due to the
challenging macro-economic conditions combined with our decision to broadly
hold onto the level of our fee earner headcount.

 

Geographical Analysis (unless stated otherwise all growth rates are vs. 2023
and in constant currency)

 

 EMEA            Gross Profit (£m)       Growth Rates
 (55% of Group)   2024        2023       Reported  Constant
 Q4              107.5       132.8       -19.1%    -15.9%
 FY              462.6       549.5       -15.8%    -13.4%
 Q4

 ·    France (15% of Group) -17%

 ·    Germany (12% of Group) -23%

 ·    Benelux -20%

 o  Belgium -5%

 o  Netherlands -27%

 ·    Southern Europe -5%

 o  Italy -10%

 o  Spain -5%

 ·    Middle East and Africa -8%

 Headcount at 31 December 2024: 3,530 (30 September 2024: 3,654)

 

In Europe, Middle East and Africa, gross profit declined 15.9% to £107.5m.
The challenging conditions and reduction in activity levels that we
experienced in Q3 worsened in Q4, with lower levels of candidate and client
confidence. France, the Group's largest market, declined 17%. Temporary
recruitment, down 12%, outperformed permanent, down 21%. Germany, our second
largest market, saw particularly challenging market conditions, down 23%. We
saw tough conditions in all brands, with a deterioration in client and
candidate confidence impacting both permanent and temporary recruitment.
Elsewhere in Europe, market conditions remained challenging in all countries.
In the Middle East and Africa, gross profit was down 8%. In response to
ongoing challenging market conditions, we reduced our fee earner headcount by
116 in Q4, mainly in France and Germany.

 

 Americas        Gross Profit (£m)       Growth Rates
 (18% of Group)  2024        2023        Reported  Constant
 Q4              35.4        40.8        -13.2%    -5.5%**
 FY              149.0       173.3       -14.0%    -9.9%**
 Q4

 ·    North America (10% of Group) +2%

 o  US +3%

 ·    Latin America (8% of Group) -14%**

 o  Mexico -4%

 o  Brazil -12%

 Headcount at 31 December 2024: 1,327 (30 September 2024: 1,341)

 ** Excluding Argentina due to hyperinflation

 

In the Americas, we delivered gross profit of £35.4m, down 5.5% excluding
Argentina due to hyperinflation. The US grew 3%, an improvement on the decline
of 11% in Q3. We saw an increase in activity levels and trading during the
quarter, particularly in Engineering, Accounting and Financial Services. In
Latin America, excluding Argentina, gross profit declined 14%. Mexico, our
largest country in the region, declined 4%, an improvement on the 15% decline
in Q3. Brazil was down 12%, albeit against a tough comparator due to a one-off
release in the prior year. Excluding this item, Brazil grew 1%. Elsewhere in
Latin America, the remaining countries declined 24%, collectively. Overall fee
earner headcount decreased by 8.

 

 

 Asia Pacific    Gross Profit (£m)       Growth Rates
 (15% of Group)  2024        2023        Reported  Constant
 Q4              29.5        35.8        -17.4%    -14.6%
 FY              126.5       159.6       -20.8%    -16.9%
 Q4

 ·    Asia (12% of Group) -12%

 ·    Greater China (4% of Group and 31% of Asia) -23%

 o  Mainland China -26%

 o  Hong Kong -19%

 ·    South East Asia -4%

 ·    Japan -6%

 ·    India -7%

 ·    Australia -25%

 Headcount at 31 December 2024: 1,532 (30 September 2024: 1,441)

 

In Asia Pacific, gross profit for Q4 declined 14.6% against 2023 to £29.5m.
Greater China declined 23%, broadly in line with Q3, with Mainland China and
Hong Kong down 26% and 19%, respectively. South East Asia declined 4%, with
Singapore down 3%. India declined 7%, albeit against a tough comparator, and
Japan declined 6%. Australia declined 25%, with ongoing challenging conditions
across all states. Our fee earner headcount in the region increased by 17,
mainly in Japan. Our non-operations headcount increased by 74 in Q4, due to
the double running of c. 65 heads as we transitioned our SSC from Singapore to
Kuala Lumpur.

 

 UK              Gross Profit (£m)       Growth Rate
 (12% of Group)  2024        2023
 Q4              24.3        28.1        -13.6%
 FY              104.4       124.7       -16.3%
 Q4

 ·    Michael Page -9%

 ·    Page Personnel -22%

 Headcount at 31 December 2024: 972 (30 September 2024: 1,006)

 

In the UK, gross profit for Q4 declined 13.6% against 2023 to £24.3m, in line
with Q3. The conversion of interviews to accepted offers remains a significant
area of challenge, with ongoing subdued levels of client and candidate
confidence also impacting decision making and increasing time-to-hire.
Reflecting the continued challenging trading conditions, our fee earner
headcount in the region reduced by 23.

 

Perm/Temp mix

 

Gross profit from permanent recruitment decreased 16.8% in reported rates and
12.5% in constant currencies to £137.4m (Q4 2023: £165.2m). Gross profit
from temporary recruitment decreased 18.0% in reported rates and 14.2% in
constant currencies to £59.3m (Q4 2023: £72.3m). This resulted in a ratio of
permanent to temporary recruitment of 70:30 (Q4 2023: 70:30).

 

Headcount

 

We reduced our fee earner headcount by 130 (2.4%) during Q4, mainly in Europe
and the UK. Our non-operations headcount increased by 49 (2.5%) in Q4. This
increase was due to the double running of c. 65 heads as we transitioned our
SSC from Singapore to Kuala Lumpur. Overall, the Group had 5,370 fee earners
and a total headcount of 7,361.

 

Foreign Exchange

 

Foreign exchange movements had a negative impact on the Group's results in Q4,
decreasing our Q4 reported gross profit by 4.2 percentage points, or £9.8m.

 

Financial Position

 

Save for the effects of Q4 trading detailed above and the payments of the 2024
interim dividend of £16.8m on 11 October 2024, 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 2024. Net cash
at 31 December 2024 was c. £95m (Q3 2024: c. £93m, Q4 2023: c. £90m).

 

Shares

 

At 31 December 2024 there were 328,618,774 Ordinary shares in issue, of which
16,696,972 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 15,288,185 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 2024 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 6 March 2025.

 

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/677ba583a4d247000ef01dba/ioytr
(https://url.uk.m.mimecastprotect.com/s/vJFyCKZwOcqjjLrLFMfDS5JfpW?domain=investis-live.com)

 

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 17 16 36 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 13 January 2025 at:

 

https://www.page.com/presentations/year/2025
(https://www.page.com/presentations/year/2025)

 

 

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