PageGroup shares slump on weaker Q1 profits as jobs market stagnates

PageGroup shares slumped on Monday after the recruitment firm reported lower first-quarter gross profit and cut 100 jobs itself as employers in its key markets slowed hiring rates.

The recruitment firm on Monday said gross profit for the first three months of the year fell 12.9% to £219.7m on an annual basis, with UK and Asia-Pacific operations down 19.2% and 22% respectively.

France and Germany also saw a marked slowdown, with gross profit falling 16% in each in the first quarter versus single digit falls in the prior three months as the slower end to the fourth quarter of 2023 continued, particularly within Continental Europe.

“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,” said chief executive Nicholas Kirk.

“Permanent recruitment was more impacted than temporary across all of our markets, as clients continue to seek more flexible options.”

Last month, PageGroup reported a 39.6% slump in pre-tax profits for 2023.

AJ Bell investment director Russ Mould said shareholders, "and perhaps economists and policymakers" would be worried that temporary hires were now also coming under pressure.

"Fee income fell year-on-year for the first time since the pandemic. 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."

“The good news here, though, is that chief executive Nicholas Kirk and the board are not planning any further substantial reduction in headcount.

“Moreover, analysts are already expecting a weak 2024 for the company. The consensus estimate for pre-tax profit this year is £103m, compared to 2023’s £119m. That forecast has seeped lower from £129m back in January, when Kirk issued a mild profit warning after a soggy end to 2023, and implies a second straight drop in annual profits.”

Reporting by Frank Prenesti for Sharecast.com