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PageGroup said profits will fall this year, as the recruiter warned that economic uncertainty and geopolitical tensions were weighing on an already weakened global jobs market.
The Surrey-based group reported a £224.3mn gross profit for its second quarter, down 12 per cent year on year in constant exchange rates, as budget-conscious employers put off hiring decisions in a harsh economic climate.
It said there were “no immediate signs of improvement” in most of its markets, with tough trading forcing it to shed 153 jobs in the three-month period, taking its headcount to 5,598 from over 7,000 in September 2022.
The group added that employers had become increasingly “risk averse” as their “recruitment budgets have tightened”, and while “salary levels remain strong”, offers were not as high as in the past two years. Candidates were reluctant to move job too, it said.
Following weaker than expected trading in June, and recent geopolitical and macroeconomic uncertainty, the company expected to report annual operating profits of around £60mn, compared with £118.8mn last year. Analysts had previously been expecting a figure of about £90mn.
Shares tumbled by almost 8 per cent in early morning trading on Tuesday before paring some of those losses to a drop of around 5 per cent by midday. Shares in rival Hays, which is due to release annual results on Thursday, were down by around 4 per cent by lunchtime, while Switzerland’s Adecco Group fell by around 2 per cent.
“We experienced a softening in activity levels through the quarter, particularly in terms of new jobs registered and number of interviews,” said PageGroup chief executive Nicholas Kirk, adding that it had become increasingly difficult to convert interviews to accepted offers. Kirk said gross profits fell by 18 per cent in June alone year on year.
The company, which operates in 37 countries, posted weak results across most of its markets, including the US, France, Germany and Britain. In the UK, profits fell by 17.4 per cent, while profits in mainland China fell by 25 per cent, with Hong Kong down 38 per cent.
Gross profits from temporary hiring declined 9.8 per cent over the second quarter, compared with a 12.8 per cent drop for gross profits from permanent appointments, as employer cautiousness resulted in comparative resilience among temporary roles.
However the rate of decline in profits from temporary hires worsened from the first quarter too. Russ Mould, analyst with AJ Bell, said: “It will be of particular concern to the company’s shareholders, and perhaps economists and policymakers, that temporary hires are coming under further pressure.
“Usually employers will focus on full-time hires if they are feeling confident and temporary ones if they have less visibility, so retrenchment in part-time posts is a potentially troubling sign.”
Despite cuts to its own headcount last year, PageGroup said it planned to “broadly hold fee earners at existing levels” to ensure it was “well placed to take advantage of opportunities as sentiment and confidence improve”.
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