Pagegroup expects annual profits to sink by a third

Group operating profit for 2023, excluding one-off items, is expected to come in at between £125m and £130m, compared with the £196.1m made in 2022. That would represent a decline of 33-36%.

"The Group delivered a resilient result in challenging markets. EMEA was our best performing region, however, tough market conditions affected our performances in Asia, the UK and the US," said chief executive Nicholas Kirk.

Group gross profit declined 7.9% in constant currencies in the third quarter, down 10.5% at reported rates.

Strong growth of 5.8% was seen in the temporary recruitment business, but this was outweighed by a 12.1% drop in permanent recruitment activities, which account for 72% of overall profits.

Kirk said: "Candidate shortages remain acute and are supportive of continued high fee rates. Salary levels remain elevated, albeit the salary increases offered to candidates reduced compared to Q3 2022. These lower offers, combined with lower candidate confidence, led to a further increase in the number of offers rejected by candidates, either through employer buybacks or unwillingness to risk the move for the size of incentive on offer. The increased time to hire that we saw in Q2 continued."

Fee earner headcount was cut across all regions in the third quarter, reducing by by 310, or 4.8%, leaving the total headcount at 8,140, some 10.7% lower than the corresponding quarter of 2022.

"As previously disclosed, as part of our refined strategy and our increased focus on our conversion rate target, we have already implemented a number of initiatives to reduce our cost base. These initiatives will incur a one off cost in 2023 of c. £15m, offset by the majority of the cost savings being realised in FY23. The net negative impact this year will be c. £5m. Going forward, we expect these initiatives to deliver annualised savings of c. £20m per annum compared to our FY23 cost base from FY24 onwards."