- Six-month operating profits slide 45%
- Special dividend worth £50 million
- Total payout of £100 million so far this year
Recruitment firm PageGroup (PAGE) posted a slight rise in first-half net fee income but a sharp drop in profits as its conversion rate slumped and costs ate into earnings.
However, after an initial drop the shares were in the green by mid-morning up 0.2% to 453p as investors latched onto the news of a £50 million special dividend on top of the regular payout.
WEAK FIRST-HALF TRADING
Like other staffing firms, PageGroup suffered from a strong comparable period last year as firms rushed to beef up their headcount and a weaker market this year with roles taking longer to fill.
‘The challenging conditions we saw towards the end of 2022 continued into H1 2023, with lower levels of both candidate and client confidence resulting in delays in decision making and candidates being more reluctant to accept offers’, explained chief executive Nicholas Kirk.
Net fee income rose 5.8% to £1.03 billion, but gross profit slipped 2.2% to £527 million and operating profit tumbled nearly 45% to £63.9 million against £115 million last year as a high cost base meant the rate at which the firm converted gross profit into operating profit fell to 12.1% from 21.4% in 2022.
Geographically, EMEA (Europe, the Middle East and Africa) performed well, generating record net fees of £580 million, up 11% on the year, and contributing the bulk of the group’s operating profit at £48 million.
The Amercias also performed well at the top line, generating £151 million net fee income, up 10% on last year, but Asia Pacific and the UK both posted lower fees as the recovery of activity in mainland China was slower than expected and the UK business experienced ‘more challenging trading conditions’.
SPECIAL DIVIDEND A SILVER LINING
Despite the group’s weaker than expected operating performance, shareholders were rewarded for their patience with the announcement of a 4.5% increase in the ordinary dividend and a special dividend.
As well as an interim 2023 payment of 5.13 pence per share, amounting to £16.2 million, the firm has set aside £50 million for a special payment of 15.87 pence per share.
Together with the final dividend of 2022 of 10.76 pence per share distributed in June, amounting to £33.9 million, this means PageGroup will have paid out just over £100 million or 31.76 pence per share.
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