Recruiter PageGroup warns on profits

In a trading update for the second quarter, the company said gross profit fell 12% versus the same period a year earlier to £224m. PageGroup said it continued to see tough market conditions in the majority of its markets, with no immediate signs of improvement.

"As clients' recruitment budgets have tightened, they have become more risk averse which has slowed the recruitment process," it said. "Although salary levels remain strong, offers made to candidates were not as elevated as they were in 2022 and early 2023."

The recruiter also said it had seen a slower end to the quarter, with June gross profits down 18% on 2023 and a softening of activity levels through the quarter, particularly in terms of new jobs registered and number of interviews.

PageGroup said conversion of interviews to accepted offers remains the most significant challenge due to subdued client and candidate confidence.

"Given the weaker than expected trading in June, recent increased geopolitical and macroeconomic uncertainty and consequently a more cautious view for H2, the board now expects full year 2024 operating profit to be in the region of £60m," it said. This is down from £118.8m last year and below estimates of £90m.

At 0945 BST, the shares were down 6.8% at 394p.

Russ Mould, investment director at AJ Bell, said: "What may alarm investors in recruiter PageGroup after the company’s profit warning is the evidence of an acceleration in the extent to which trading conditions are deteriorating.

"Look at the numbers and it’s clear the company had a horrible June. The company blames geopolitical and macroeconomic uncertainty and this has wider significance given the importance of labour market conditions to central bank decision-making.

"If the jobs market continues to cool and wage inflation eases then the likes of the Federal Reserve and Bank of England may feel they have more room to cut interest rates.

"Recruitment firms are always tied to wider economic conditions to some extent but this seems particularly to be the case for PageGroup and suggests a shift in market positioning might be required if the business is going to make itself more resilient in the future."