REG - PageGroup plc - Second Quarter 2022 Trading Update

PagegroupAnnouncement

13/07/2022 07:00

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RNS Number : 2460S  PageGroup plc  13 July 2022

13 July 2022

 

PAGEGROUP PLC

 

SECOND QUARTER 2022 TRADING UPDATE

RECORD QUARTERLY PERFORMANCE

 

Q2 Highlights*

 

·    Group gross profit of £280.9m, +25.5% vs. Q2 2021

·    Record performance in June, second month with gross profit in excess
of £100m

·    EMEA +29.4%: France +21%; Germany +32%

·    Asia Pacific +11.7%: Greater China -11%; SE Asia +33%; Japan +15%;
India +47%

·    Americas +34.1%: US +30%; Latin America +40%

·    UK +22.6%: Michael Page +13%; Page Personnel +56%

·    Large, High Potential markets (39% of Group) +23%, +33% excluding
Greater China

·    Increase in fee earner headcount of 307 in Q2 to 6,734 (Q1 2022:
6,427)

·    Strong cash position, net cash of c. £135m (Q1 2022: c. £122m, Q2
2021: c. £164m)

 

* In constant currencies vs. 2021 except where stated otherwise

 

 

Q2 Gross Profit Analysis

 

                           Reported (£m)             Constant
 Year-on-year  % of Group  Q2 2022  Q2 2021  %       %
 EMEA          49%         137.1    107.4    +27.6%  +29.4%
 Asia Pacific  19%         53.6     46.0     +16.7%  +11.7%
 Americas      18%         51.1     34.5     +48.0%  +34.1%
 UK            14%         39.1     31.9     +22.6%  +22.6%
 Total         100%        280.9    219.8    +27.8%  +25.5%

 Permanent     78%         220.1    171.0    +28.7%  +25.7%
 Temporary     22%         60.8     48.8     +24.6%  +24.5%

 

H1 Gross Profit Analysis

 

                           Reported (£m)             Constant
 Year-on-year  % of Group  H1 2022  H1 2021  %       %
 EMEA          50%         266.8    203.5    +31.1%  +35.0%
 Asia Pacific  19%         102.2    81.8     +25.0%  +22.1%
 Americas      17%         94.0     61.3     +53.4%  +43.9%
 UK            14%         76.0     57.6     +31.9%  +31.9%
 Total         100%        539.0    404.2    +33.3%  +33.3%

 Permanent     78%         422.1    311.3    +35.6%  +35.0%
 Temporary     22%         116.9    92.9     +25.8%  +27.6%

 

 

 

Steve Ingham, Chief Executive Officer, PageGroup, said:

 

"We continued to see strong growth in Q2; Group gross profit was up 25.5%
against 2021, with another good broad-based performance across our
geographies, disciplines and brands. We delivered a record quarter for the
Group, with record performances in 25 countries. We exited the quarter
strongly, delivering a record month in June, our second month of gross profit
in excess of £100m.

 

"This performance was achieved despite the backdrop of macro-economic and
geo-political uncertainty as well as continued COVID-19 restrictions in
certain markets. We believe that our strategy of maintaining and investing in
our platform throughout the pandemic; by investing in experienced hires; and
focusing on technology and innovation, has been key to us achieving these
outstanding results.

 

"We delivered increased levels of productivity, with the Group continuing to
benefit from favourable trading conditions, including wage inflation and
increased fee rates resulting from the high demand and short supply of
candidates, as well as a shorter time to hire facilitated by video
interviewing, and investments in new systems.

 

"We continued to invest in headcount to enable us to capitalise on future
growth opportunities. We added 307 fee earners in Q2, broadly in line with
recent quarters, with the most significant increases in the markets where we
saw the strongest performances and highest potential for future growth. The
implementation of our global operating system, Customer Connect, was completed
in May, following successful roll-outs in the remaining countries of Brazil,
Mexico and Panama.

 

"Looking forward, we are clearly aware of the heightened degree of
macro-economic and political uncertainty that exists globally, particularly
with regards to increasing inflation in the majority of the markets in which
we operate. We are monitoring all KPIs in the business regularly, but to date
we have seen no significant changes apart from the usual seasonal movements.
Given our highly diversified and adaptable business model, with a cost base
that can be adjusted rapidly, we will look to progress towards our strategic
goals while remaining vigilant. We are pleased with the Group's performance in
the first half of the year and currently expect 2022 full year operating
profit to be in line with company compiled consensus of £205m."

 

 

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

 

Large, High Potential Markets

 

Our 5 Large, High Potential geographic markets of Germany, Greater China,
Latin America, South East Asia and the US represented 39% of the Group
collectively, and grew 23% in Q2. Excluding Greater China, which was impacted
by COVID-19 lockdowns and restrictions, growth was 33%, with record quarters
in the other four markets.

 

 

 EMEA            Gross Profit (£m)       Growth Rates
 (49% of Group)   2022       2021        Reported  Constant
 Q2              137.1       107.4       +27.6%    +29.4%
 H1              266.8       203.5       +31.1%    +35.0%

 ·    France (13% of Group) +21%

 o  Page Personnel +17%

 o  Michael Page +26%

 ·    Germany (11% of Group) +32%

 ·    Benelux +37%

 o  Belgium +33%

 o  Netherlands +41%

 ·    Southern Europe +37%

 o  Italy +27%

 o  Spain +38%

 ·    Middle East and Africa +19%

 Headcount at 30 June 2022: 3,815 (31 March 2022: 3,650)

 

In Europe, Middle East and Africa, strong trading conditions continued into
Q2. We delivered a record quarter, with gross profit of £137.1m, up 29.4%
against Q2 2021. France delivered a record quarter, up 21%, with Michael Page
up 26% and Page Personnel up 17%. Germany, the Group's third largest market,
delivered another record quarter, up 32%, with strong growth across all
brands. Our Technology focused Michael Page Interim business delivered a
standout result, growing 40%. Benelux was up 37%, with both Belgium and the
Netherlands delivering record quarters, up 33% and 41%, respectively. Southern
Europe also had a record quarter, up 37%, with Italy up 27%, and Spain up 38%.
The Middle East and Africa was up 19%. In line with the improved trading
conditions, our fee earner headcount increased by 137 in the quarter, mainly
in the higher growth markets of Germany, Italy and Spain.

 

 

 Asia Pacific    Gross Profit (£m)       Growth Rates
 (19% of Group)  2022        2021        Reported  Constant
 Q2              53.6        46.0        +16.7%    +11.7%
 H1              102.2       81.8        +25.0%    +22.1%

 ·    Asia (15% of Group) +9%

 ·    Greater China (6% of Group and 43% of Asia) -11%

 o  Mainland China -13%

 o  Hong Kong -8%

 ·    South East Asia +33%

 ·    India +47%

 ·    Japan +15%

 ·    Australia +24%

 Headcount at 30 June 2022: 1,842 (31 March 2022: 1,796)

 

In Asia Pacific, gross profit for Q2 was up 11.7% against 2021 to £53.6m, a
record quarter. Greater China declined 11%, with Mainland China down 13%,
driven by the recent COVID-19 lockdowns and restrictions. Hong Kong was also
impacted and declined 8% for the quarter. However, our other Large, High
Potential geographic market in the region, South East Asia, delivered a record
quarter with growth of 33%. Both India and Japan also delivered record
quarters, growing 47% and 15%, respectively. Australia grew 24% for the
quarter. Our fee earner headcount in the region increased by 37, mostly in
South East Asia and India.

 

 

 Americas        Gross Profit (£m)       Growth Rates
 (18% of Group)  2022        2021        Reported  Constant
 Q2              51.1        34.5        +48.0%    +34.1%
 H1              94.0        61.3        +53.4%    +43.9%

 ·    North America (11% of Group) +31%

 o  US +30%

 ·    Latin America (7% of Group) +40%

 o  Mexico +43%

 o  Brazil +28%

 Headcount at 30 June 2022: 1,633 (31 March 2022: 1,498)

 

In the Americas, gross profit for Q2 was up 34.1% against 2021, with both
North America and Latin America achieving record quarters. In the US, where
the improvements in trading conditions we saw in the second half of 2021
continued, we grew 30%, producing a record quarter. There was strong growth in
all offices, though most significantly in Boston, Chicago and Houston. In
Latin America, gross profit grew 40%. Mexico, our largest country in the
region, was up 43%, delivering a record quarter. Brazil was up 28% and
elsewhere in Latin America, the remaining countries grew 45%, collectively,
with record results in Argentina, Colombia and Panama. We increased our fee
earner headcount by 104 across the region in Q2, mainly in the US and Mexico.

 

 

 UK              Gross Profit (£m)       Growth Rate
 (14% of Group)  2022        2021
 Q2              39.1        31.9        +22.6%
 H1              76.0        57.6        +31.9%

 ·    Michael Page +13%

 ·    Page Personnel +56%

 Headcount at 30 June 2022: 1,378 (31 March 2022: 1,344)

 

In the UK, gross profit grew 22.6% in the quarter. Page Personnel, which
operates at lower salary levels and had been slower to recover from the
pandemic, was up 56%, delivering a record quarter. Michael Page grew 13%. Our
fee earner headcount increased by 29 in Q2.

 

Perm/Temp mix

 

Gross profit from permanent recruitment increased 28.7% in reported rates and
25.7% in constant currencies to £220.1m (Q2 2021: £171.0m). Gross profit
from temporary recruitment increased 24.6% in reported rates and 24.5% in
constant currencies to £60.8m (Q2 2021: £48.8m). This resulted in a ratio of
permanent to temporary recruitment of 78:22 (Q2 2021: 78:22).

 

Headcount

 

As trading conditions continued to be strong, we added 307 fee earners in Q2.
The majority of these were non-experienced hires, as the availability of
experienced hires has become increasingly limited. Our non-operations
headcount rose by 73 in Q2, and, as such, our ratio of fee earners to
non-operations staff was maintained at 78:22. Overall, the Group had 6,734 fee
earners and a total headcount of 8,668.

 

Productivity

 

Productivity, measured as gross profit per fee earner, increased due to the
continued favourable trading conditions, including wage inflation and
increased fee rates resulting from the high demand and short supply of
candidates, as well as a shorter time to hire facilitated by video
interviewing, and investments in new systems. We completed the roll-out of
Customer Connect, our new global operating system, during the quarter. This
allows us to integrate sales and marketing activities and leverage our
investments across our live platforms.

 

Financial Position

 

Save for the effects of Q2 trading detailed above and the payment of the 2021
final dividend of £32.7m, there have been no other significant changes in the
financial position of the Group since the publication of the results for the
quarter ended 31 March 2022. Net cash at 30 June 2022 was c. £135m (Q1 2022:
c. £122m, Q2 2021: c. £164m).

 

Shares

 

At 30 June 2022 there were 328,618,774 Ordinary shares in issue, of which
12,405,613 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 10,759,117 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 Second Quarter 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 H1 results on 8 August 2022.

 

 

Enquiries:

 

 PageGroup                              +44 (0)20 3077 8172
 Steve Ingham, 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 9:00am today. The live presentation can be viewed by following
the link:

https://www.investis-live.com/pagegroup/62b9ce7c478a650e0006c5d7/pagq
(https://protect-eu.mimecast.com/s/JWE1CvoEgT7GyWA9cQT99Y?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 36 51 71 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 July 2022 at:

https://www.page.com/presentations/year/2022
(https://protect-eu.mimecast.com/s/WDPQCMQyjHqjqp96Uw42fx?domain=page.com)

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