ii view: profit drop dumps cautious PageGroup

Fourth-quarter trading update to 31 December

• Gross profit down 4.6% to £190.7 million
• Net cash held of £31 million, down from £38 million in late September

Guidance:

• Expects full-year 2025 operating profit to broadly match City forecasts of £21.1 million versus £52 million in 2024

Chief executive Nicholas Kirk said:

"The Group produced a resilient performance despite the ongoing market uncertainty, which is characterised by continued subdued levels of client and candidate confidence.

"While the market outlook remains uncertain due to the unpredictable economic environment, we will continue to control the controllables and we remain confident in the execution of our strategy, given our highly diversified and adaptable business model, strong balance sheet and our cost base that is under continuous review."

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ii round-up:

Global recruiter PageGroup (LSE:PAGE) expects annual profit for 2025 to broadly match City forecasts, but with outlook comments underlining economic uncertainty as well as continued subdued levels of client and candidate confidence.

Fourth-quarter gross profit to late December fell 4.6% year-over-year to £190 million, an improvement from 6.7% and 10.5% year-on-year declines in Q3 and Q2. Management’s guidance for 2025 operating profit of £21.1 million is potentially down from £52 million in 2024.

Shares in the FTSE 250 company fell 1.5% in UK trading having fallen by close to a third in 2025. That’s similar to fellow recruiter Hays (LSE:HAS). The FTSE 250 index rose by almost 9% last year.

Page helps companies across more than 20 sectors, including accountancy, technology and engineering, to hire staff via its brands Page Executive, Page Personnel and Michael Page.

Weakness in its biggest and second biggest markets France and the UK was partly countered by strength in its fourth biggest market the USA.

Gross fourth-quarter profit on an adjusted currency basis for its EMEA region (Europe, Middle East and Africa) fell 9% to £102.1 million, with UK profits on the same basis down 10% to £22 million.

Constant currency gross profits for the Americas region rose 2.5% to £36.2 million, with a gain of 6.4% to £30.2 million seen in Asia Pacific.

Profits from Permanent hires during the quarter, and accounting for 71% of overall profits, fell 3.3%. Temporary hire related profits, accounting for the balance of 29%, dropped 2.9%.

Management performance initiatives during the quarter included a 1.5% reduction in fee earning hirers. Costs over 2025 fell £5 million with annualised savings of £15 million targeted from 2026 onwards.

Group net cash held of £31 million is down from £38 million at the end of the prior third quarter. Full-year results are scheduled for 5 March.

ii view:

Started in 1976 and headquartered in Weybridge, Surrey, Page is today focused on the recruitment of specialist, generally 'white-collar' staff. Geographically, the EMEA region generated most profits in 2025 at 53%. That was followed by the Americas at 19%, Asia Pacific including China and India 16%, and finally the UK at 12%.

For investors, the AI revolution may see fewer jobs required in the future. Stretched government finances for key markets France and the UK are likely to see the tax burden remain high, overshadowing corporate and candidate confidence. Net cash of £31 million held is down from £95 million a year ago, while a previous cut in the dividend from larger rival Hays could set a trend for the wider sector.

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On the upside, a trimming of recruitment consultants and associated costs to match reduced customer demand continues, with headcount down by more than 15% since 2019 and recent cuts largely made across the troubled Europe region. A wider adjustment of the management structure and support staff is expected to see annualised cost savings of £15 million from 2026 onwards. Diversity of both underlying client industries and geographical regions exists, while even a possible halving of the dividend payment would still leave the shares on a yield above 3%.

In all, management action and growth across the US and Asia accounting for just over a third of group profits offers some hope. However, the shares are friendless at the moment and more cautious investors are likely to await wider evidence of recovery before taking an 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