REG - PageGroup plc - FOURTH QUARTER AND FULL YEAR 2022 TRADING UPDATE

PagegroupAnnouncement

11/01/2023 07:00

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RNS Number : 3097M  PageGroup plc  11 January 2023

 

 

11 January 2023

 

FOURTH QUARTER AND FULL YEAR 2022 TRADING UPDATE

RECORD YEAR DESPITE SOFTENING TOWARDS THE END OF Q4

 

Q4 Highlights*

 

·    Group gross profit of £266.4m, +3.5% vs. 2021

·    EMEA +11.8%: France +7%; Germany +14%

·    Americas +6.6%: US +2%; Latin America +13%

·    Asia Pacific -15.8%: Greater China -41%; SE Asia -2%; Japan -5%;
India +10%

·    UK -1.9%: Michael Page -12%; Page Personnel +31%

·    Large, High Potential markets (37% of Group) -2%; excluding Greater
China +8%

·    Decrease in fee earner headcount of 128 to 6,943 (Q3 2022: 7,071)

·    Strong cash position, net cash of c. £131m (Q3 2022: c. £186m, Q4
2021: c. £154m)

·    Client and candidate confidence deteriorated towards the end of the
quarter

·    2022 full year operating profit now expected to be c. £195m

 

* In constant currencies vs 2021 except where stated otherwise

 

Q4 Gross Profit Analysis

 

                           Reported (£m)             Constant
 Year-on-year  % of Group  Q4 2022  Q4 2021  %       %
 EMEA          53%         141.2    123.0    +14.8%  +11.8%
 Americas      18%         46.5     38.4     +21.2%  +6.6%
 Asia Pacific  16%         43.0     49.1     -12.4%  -15.8%
 UK            13%         35.7     36.4     -1.9%   -1.9%
 Total         100%        266.4    246.9    +7.9%   +3.5%

 Permanent     74%         197.5    190.0    +3.9%   -0.8%
 Temporary     26%         68.9     56.9     +21.2%  18.0%

 

Full Year Gross Profit Analysis

 

                           Reported (£m)           Constant
 Year-on-year  % of Group  2022     2021   %       %
 EMEA          50%         538.0    432.0  +24.5%  +25.4%
 Americas      18%         193.4    138.5  +39.6%  +26.7%
 Asia Pacific  18%         195.3    179.3  +8.9%   +4.8%
 UK            14%         149.1    127.9  +16.5%  +16.5%
 Total         100%        1,075.8  877.7  +22.6%  +20.1%

 Permanent     77%         826.2    676.1  +22.2%  +19.2%
 Temporary     23%         249.6    201.6  +23.8%  +23.1%

 

 

Nicholas Kirk, Chief Executive Officer, PageGroup, said:

 

"I am pleased to be announcing my first quarterly trading update as CEO. After
28 years at the Group, it is an incredible honour to be leading this great
company and I look forward to working with the Board, the Executive Team and
our highly talented colleagues to drive the business forward.

 

"2022 was a record year for the Group with gross profit growing 20%
year-on-year and, in Q4, we delivered gross profit growth of 3.5% against Q4
2021. As the quarter progressed, conditions became increasingly challenging
and we saw a reduction in both candidate and client confidence, leading to
further delays in decision making, as well as candidates being more reluctant
to accept offers. Due to these tougher trading conditions, gross profit per
fee earner, our measure of productivity, declined 12% compared to Q4 2021.
Given the slowdown in trading towards the end of Q4, we now expect 2022 full
year operating profit to be c. £195m.

"Looking forward, there remains a high level of global macro-economic and
political uncertainty in the majority of our markets. However, against this
backdrop, we continue to see candidate shortages and good levels of vacancies.
Given our highly diversified and adaptable business model, with a cost base
that can be adjusted rapidly and a strong balance sheet, we believe we are
well-positioned to weather the uncertainty and continue to make strong
shareholder returns."

Geographical Analysis (unless stated otherwise all growth rates are vs. 2021
and in constant currency)

 

 EMEA            Gross Profit (£m)       Growth Rates
 (53% of Group)  2022        2021        Reported  Constant
 Q4              141.2       123.0       +14.8%    +11.8%
 FY              538.0       432.0       +24.5%    +25.4%

 ·    France (14% of Group) +7%

 o  Page Personnel +10%

 o  Michael Page +3%

 ·    Germany (12% of Group) +14%

 ·    Benelux +15%

 o  Belgium +24%

 o  Netherlands +9%

 ·    Southern Europe +15%

 o  Italy +7%

 o  Spain +12%

 ·    Middle East and Africa +24%

 Headcount at 31 December 2022: 4,085 (30 September 2022: 4,048)

 

In Europe, Middle East and Africa, gross profit grew 11.8% to £141.2m. France
delivered a record quarter, up 7%, with stronger growth in Page Personnel,
which had been slower to recover from the pandemic. However, France exited the
quarter slower in December, due to increased caution amongst both clients and
candidates. Germany delivered another record quarter, up 14% against a tough
comparator in Q4 2021. Our Technology focused Interim business continued to
deliver standout results, up 35%. Elsewhere in the region, we delivered robust
results, but again saw candidate and client confidence deteriorating towards
the end of the quarter. Having added 197 fee earners in Q3, we added at a
slower rate in Q4, up 21 for the region overall.

 

 

 Americas        Gross Profit (£m)       Growth Rates
 (18% of Group)  2022        2021        Reported  Constant
 Q4              46.5        38.4        +21.2%    +6.6%
 FY              193.4       138.5       +39.6%    +26.7%

 ·    North America (11% of Group) +2%

 o  US +2%

 ·    Latin America (7% of Group) +13%

 o  Mexico +1%

 o  Brazil +2%

 Headcount at 31 December 2022: 1,690 (30 September 2022: 1,731)

 

In the Americas, we delivered gross profit of £46.5m, up 6.6% against Q4
2021. In the US, we grew 2%, compared to 14% in Q3. Conditions became more
challenging as the quarter progressed, with uncertainty around market
conditions affecting both candidate and client confidence. Construction, our
largest discipline in the US, saw a slowing in residential builds alongside
reduced funding for commercial projects. In Latin America, gross profit grew
13%, despite political and macro-economic uncertainty across the region,
particularly in Brazil. Mexico, our largest country in the region, was up 1%,
compared to 18% in Q3, with increased delays in decision making. Brazil was up
2% and elsewhere in Latin America the remaining countries grew 33%,
collectively, with record quarters delivered by both Argentina and Colombia.
In line with the more challenging conditions, overall fee earner headcount
decreased by 59, mainly in the US and Brazil.

 

 Asia Pacific    Gross Profit (£m)       Growth Rates
 (16% of Group)  2022        2021        Reported  Constant
 Q4              43.0        49.1        -12.4%    -15.8%
 FY              195.3       179.3       +8.9%     +4.8%

 ·    Asia (12% of Group) -20%

 ·    Greater China (4% of Group and 36% of Asia) -41%

 o  Mainland China -52%

 o  Hong Kong -26%

 ·    South East Asia -2%

 ·    India +10%

 ·    Japan -5%

 ·    Australia flat

 Headcount at 31 December 2022: 1,842 (30 September 2022: 1,905)

 

In Asia Pacific, gross profit for Q4 was down 15.8% against 2021 to £43.0m.
Permanent recruitment across the region declined 19%, whilst temporary
recruitment grew 5%, reflecting the uncertain market conditions. Greater China
declined 41%, with Mainland China down 52%, initially due to the COVID-19
lockdowns. The relaxation of some of these restrictions, and the subsequent
high infection rate, has continued to impact activity levels. Hong Kong was
also impacted and declined 26% for the quarter. Our other Large, High
Potential geographic market in the region, South East Asia, declined 2%,
driven largely by declines in Singapore, down 9% and Indonesia, down 23%.
India grew 10% against a particularly tough comparator and Japan declined 5%,
broadly in line with Q3. Australia was flat for the quarter. Our fee earner
headcount in the region decreased by 64, mostly in Greater China.

 

 UK              Gross Profit (£m)       Growth Rate
 (13% of Group)  2022        2021
 Q4              35.7        36.4        -1.9%
 FY              149.1       127.9       +16.5%

 ·    Michael Page -12%

 ·    Page Personnel +31%

 Headcount at 31 December 2022: 1,403 (30 September 2022: 1,427)

 

In the UK, gross profit for Q4 declined 1.9% against 2021 to £35.7m. Growth
slowed from +9.5% in Q3 as we saw more clients deferring hiring decisions and
candidates becoming increasingly cautious about accepting offers. Reflecting
the more challenging trading conditions, our fee earner headcount reduced by
26 in Q4.

 

Large, High Potential Markets

 

Our 5 Large, High Potential geographic markets of Germany, Greater China,
Latin America, South East Asia and the US represented 37% of the Group
collectively, declined 2% in Q4. Excluding Greater China, these markets grew
8%.

 

Perm/Temp mix

 

Gross profit from permanent recruitment increased 3.9% in reported rates and
declined 0.8% in constant currencies to £197.5m (Q4 2021: £190.0m). Gross
profit from temporary recruitment increased 21.2% in reported rates and 18.0%
in constant currencies to £68.9m (Q4 2021: £56.9m). This resulted in a ratio
of permanent to temporary recruitment of 74:26 (Q4 2021: 77:23).

 

Headcount

 

We reduced our fee earner headcount by 128 during Q4, with reductions made
across all regions except EMEA. Our non-operations headcount rose by 37 in Q4,
as we continued to build out our capabilities in PageOutsourcing. As such, our
ratio of fee earners to non-operations staff decreased slightly to 77:23 (Q3
2022: 78:22). Overall, the Group had 6,943 fee earners and a total headcount
of 9,020.

 

Foreign Exchange

 

The Group benefited from positive foreign exchange movements during Q4,
increasing our Q4 reported gross profit by 4.4 percentage points, or £10.8m.

 

Financial Position

 

Save for the effects of Q4 trading detailed above and the payments of the 2022
interim and special dividends of £100.5m on 14 October 2022, 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 2022. Net cash
at 31 December 2022 was c. £131m (Q3 2022: c. £186m, Q4 2021: c. £154m).

 

Shares

 

At 31 December 2022 there were 328,618,774 Ordinary shares in issue, of which
12,359,110 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 10,712,614 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 2022 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 9 March 2023.

 

Enquiries:

 PageGroup                               +44 (0)19 3226 4032
 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/63a5a2f92b52ea0d001347c9/anwr
(https://protect-eu.mimecast.com/s/px0CCYvO6FLKrYjBI0oJn5?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 30 60 28 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 11 January 2023 at:

 

https://www.page.com/presentations/year/2023
(https://www.page.com/presentations/year/2023)

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