PageGroup earnings boosted by stronger US dollar, but recruiter warns of declining customer confidence
- The recruitment firm revealed gross profit of £270.5million in the third quarter
- Growth was strongest in EMEA, where profits soared by £24m
- PageGroup continues to be affected by the draconian zero Covid policy in China
PageGroup posted another impressive quarterly performance, helped by record profits in several countries and a surging US dollar.
Recruitment activity revealed gross profit of £270.5m for the three months to September, an increase of 14% at constant exchange rates on the equivalent period last year.
Growth was strongest in EMEA, where profits climbed £24 million on the back of record quarters in the Netherlands and Germany, the latter market supported by the Michael Page Interim division, focused on technology.
Boom Times: Global labor shortages combined with large numbers of voluntary job quits have provided a massive boon to the recruitment industry
Robust growth was also recorded in the Americas region, helped by double-digit increases in the United States and Mexico, while the United Kingdom division was supported by an excellent performance from its Page Personnel branch.
PageGroup ended the quarter with gross profits of more than £100m in September, the third time it has achieved such a feat, which chief executive Steve Ingham attributes in part to the strengthening US dollar.
Still, he noted a “slight weakening” in customer confidence over the period, leading to some job cuts and a slowdown in hiring in some markets.
“Looking ahead, there remains a high level of global macro-economic and political uncertainty, particularly regarding rising inflation in the majority of our markets,” Ingham noted.
The company continued to be hit hard by China’s zero Covid policy, which has resulted in massive economic damage as tens of millions of people in major cities are temporarily confined to their homes.
Compared with an 11% decline in the second quarter, its gross profits in Greater China fell 26% between June and September, leading to a 3.9% drop in total profits in the Asia-Pacific region.
Outside of China, trade was impacted by uncertainty stemming from a feverish general election in Brazil and the death of Queen Elizabeth II which dampened recruitment activity in the UK.
Despite these issues, PageGroup has maintained its full-year profit outlook, increased its workforce and net cash levels, and intends to distribute £100.5m in dividends to investors from this Friday. .
Ingham added: “Given our highly diversified and adaptable business model, with a cost base that can be adjusted quickly, we believe we are well placed to progress towards our vision for the group to be the leading recruiter specialized in each of the markets we operate.
PageGroup Shares closed up 1.5% at 375.2p on Wednesday, although their value has fallen around 43% in the past 12 months.
The Surrey-based company’s business update comes a day after fellow recruiter Robert Walters also released strong third-quarter results that showed a significant rise in profits after substantial growth in several Asian countries.
Global labor shortages combined with large numbers of voluntary quits have led employers to raise salaries to try to attract candidates, representing a massive windfall for the recruiting industry.
Over the coming year, however, this boom is likely to run out of steam, given the threat that recessions and rising interest rates pose to hiring patterns.