ii view: PageGroup profits slump but match City forecasts

First-half results to 30 June

• Currency-adjusted revenues down 8.6% to £798 million
• Operating profit of £2.1 million, down from £28.4 million
• Interim dividend unchanged at 5.36p per share
• Net cash of £11 million, down from £57 million a year ago

Guidance:

• Continues to expect full-year 2025 operating profit to broadly match City forecasts of £22 million

Chief executive Nicholas Kirk said: “The Group delivered a resilient performance in H1 despite ongoing macro-economic uncertainty. The conversion of accepted offers to placements remained the most significant area of challenge, as ongoing macro-economic uncertainty continued to impact confidence, which extended time-to-hire. Permanent recruitment continued to be impacted more than temporary, as clients sought flexible options and permanent candidates remained reluctant to move jobs.

“Overall, our focus remains to balance near-term productivity with ensuring we remain well placed to take advantage of opportunities when market conditions improve. Despite the uncertain outlook due to the unpredictable economic environment, we have a highly diversified and adaptable business model, a strong balance sheet and our cost base is under continuous review."

• Invest with ii: Open a Stocks & Shares ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA

ii round-up:

PageGroup (LSE:PAGE) today detailed profits broadly matching City expectations with the global recruitment agency reiterating its forecast for full-year 2025 operating profit of around £22 million and down from 2024’s £52 million. 

Conditions for its two biggest markets, Germany and France, had slowed further towards the end of the half year although with some pick-up in activity seen in Asia and the US. First-half operating profit of £2.1 million fell from £28.4 million a year ago, additionally hit by a £13 million restructuring charge, which management estimates will save £15 million per year from 2026. 

Shares for the FTSE 250 company fell 2% in UK trading having come into this latest news down by just over a fifth so far in 2025. That’s similar to rival Hays (LSE:HAS). The FTSE 250 index is up 6% year-to-date.

Page helps companies across 25 different sectors, including accountancy, technology and engineering, to hire staff via its brands Page Executive, Page Personnel and Michael Page.

Group net cash held fell to £11 million from £57 million a year ago. An interim dividend payment of 5,36p per share is unchanged from last year and payable to eligible shareholders on 10 October. 

Group-wide gross profit and excluding items exceptional items fell 9.7% during the period to £389 million. Of that, profit relating to permanent hires fell 13% to £282 million, with temporary hiring-related profits down 9.5% to £107 million. 

The number of fee-earning recruiters fell 4% from a year ago to 5,163. A third-quarter trading update is likely to be announced in mid-October. 

ii view:

Started in 1976 and headquartered in Weybridge, Surrey, Page is today focused on the recruitment of specialist, generally 'white-collar' staff. Located in more than 30 countries, the Europe, Middle East and Africa (EMEA) region generated its biggest slice of profits during this latest half year at 54%. That was followed by the Americas at 19%, Asia 15% and the UK 12%. Management goals outlined in September 2023 include changing one million lives and generating annual operating profit of £400 million.

For investors, US trade tariffs hindering items such as the export of cars from the European Union to the US are likely to be impacting. Markets such as France and Germany have suffered pressure to reduce government debt, raising taxes and potentially reducing customer demand. The artificial intelligence (AI) revolution may result in fewer jobs going forwards, while the dividend has stayed unchanged compared to a 4.5% increase for the previous final dividend.  

On the upside, Page has experience of operating in economic downturns. Diversity of both underlying client industries and geographical regions exists. The group’s cost base is flexible, with personnel numbers being reduced, while a forecast future dividend yield of over 6% compares to a yield of under 4% at rival Hays.

For now, and while management continues to position Page for an eventual economic pick-up, more cautious investors are likely to await evidence of a profit upturn before taking any interest.  

Positives: 

• Business sector and geographical diversity
• Flexible cost base

Negatives:

• Economic outlook uncertainty
• Currency moves can hinder

The average rating of stock market analysts:

Strong hold