- Profit from permanent recruitment down 18.6%
- UK gross profit falls by 19.2%
- Headcount reduced by 100
Shares in PageGroup (PAGE) fell 6% to 456p after the recruitment firm reported a 12.8% fall in group gross profit to £219.7 million for the first quarter of 2024.
CEO Nicholas Kirk warned: ‘The slower end to the fourth quarter of 2023 continued into the first quarter 2024, particularly within continental Europe. Overall, activity levels remain strong, however we experienced a slight deterioration in job flow towards the end of the quarter.
‘Conversion of final interviews to accepted offers is still the most significant challenge, as candidate and client sentiment remains subdued reflecting the general macro-economic uncertainty in most of our markets. Permanent recruitment was more impacted than temporary across all our markets, as clients continue to seek more flexible options.’
However, PageGroup was at pains to point out its balance sheet remains strong with net cash of circa £67 million in the coffers.
Back in January, the staffer warned of a weak end to the fourth quarter of 2024.
PageGroup’s pessimistic outlook is shared by other recruitment specialists including Hays (HAS) and Robert Walters (RWA).
EXPERT VIEW
Russ Mould investment director at AJ Bell said: ‘It’s an awful time to be a recruitment consultant despite resilience in many major economies. The persistently high interest rate environment means companies are under pressure to cut costs and trimming the number of jobs is one way to save money.
‘The natural path to follow is to either make redundancies, shift from permanent to more flexible part-time staff or not to replace anyone leaving of their own accord. These steps are all bad for recruitment agencies because it reduces the opportunities to place candidates into roles and increases the pool of people looking for work, meaning companies in certain sectors don’t have to be as generous with hiring packages as there is more candidate choice.’
Mould added: ‘PageGroup’s trading update paints a picture of a company being hit by gusts of wind from every angle. There isn’t a single territory showing profit progression and both permanent and temporary jobs are proving to be tough terrain.
‘Companies which are hiring are taking longer to make decisions and that also hurts the flow of money going to PageGroup.
‘Against this chaotic backdrop, the company must make cutbacks of its own accord. That means fewer recruitment consultants in the business. It’s no wonder the share price has experienced a sharp decline.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (James Crux) own shares in AJ Bell.
