- PageGroup said its gross profits fell by 12.9% to £196m in the fourth quarter
- Economic uncertainty continued to hit candidate and client confidence levels
PageGroup has warned that its annual profits will be towards the bottom end of forecasts as economic weakness continues to weigh on the global labour market.
The recruiter’s gross profits fell by 12.9 per cent at constant currency rates to £196million in the fourth quarter of last year, owing to weaker performances across all regions.
Profits declined fastest in the Europe, Middle East and Africa region, slumping by 15.9 per cent to £107.5million, with double-digit percentage drops recorded in France, Italy, Germany, and the Netherlands.
UK gross profits shrank by 13.6 per cent to £24.3million, while they plunged by over a quarter in mainland China, whose economy has slowed significantly amidst subdued consumer demand and a property market crisis.
PageGroup said macroeconomic uncertainty continued to impact candidate and client confidence levels in most countries.
While it noted salary levels remained high, clients have become more ‘risk averse’ as recruitment budgets have tightened, resulting in firms taking longer to hire new staff.
Redundancy: PageGroup has warned its annual profits will be towards the bottom end of forecasts as economic weakness continues to weigh on the global labour market
The company reduced its fee earner headcount by 130 to 5,370 during the final three months of 2024 in response, mainly via redundancies in the UK and Europe.
It anticipates taking an estimated £5million one-off hit from closing its shared service centres in the UK and Singapore, with activities transferred to Barcelona, Buenos Aires, and Kuala Lumpur.
Consequently, the firm now expects operating profits to be at the lower end of its £49million to £58.5million market consensus range for 2024.
PageGroup shares were 3.7 per cent down at 300p by early afternoon, making them the FTSE 250’s second-biggest faller behind Wizz Air.
Nicholas Kirk, chief executive of PageGroup, said: ‘A high degree of macro-economic and geopolitical uncertainty remains across the majority of our markets.
‘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.’
He added: ‘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.’
British recruitment businesses have cut their own staff numbers over the past few years due partly to central bank interest rate hikes making borrowing more expensive for firms looking to expand.
The technology sector has been at the forefront of layoffs as people have spent less time online following the end of Covid-related restrictions.
Russ Mould, investment director at AJ Bell, said: ‘Given recruitment is an area which can provide a warning signal for the wider economy, the consistent iffy performance of PageGroup and its peers is not exactly encouraging.’
He added: ‘Given the uncertainty, it is hard to see where an improvement might come from in the short term.’
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