PageGroup Q3 profits fall less than expected, shares rally

(Sharecast News) - PageGroup reported a drop in third-quarter profit on Wednesday as growth in the US and Asia was offset by a more challenging market in Europe, but shares in the recruiter shot higher as the decline wasn't as bad as expected. Group gross profit fell 6.7% from the same period a year earlier to £187.8m. Panmure Liberum said the fall was better than the 8% drop expected by consensus.

EMEA saw a 10.2% decline to £97.8m, while the UK and Asia Pacific saw falls of 14.3% and 1.2% to £22.6m and £31m, respectively. In the Americas, gross profit ticked up 3.5% to £36.4m.

Gross profit in the permanent division was down 6.4% to £133.1m, while the temporary segment saw a 7.5% drop to £54.7m.

The recruitment firm said that while its fee rates remained at high levels, as clients' recruitment budgets have tightened, they have become more risk averse and this has continued to slow the recruitment process, impacting time-to-hire.

It also said that although salary levels remain strong, the level of increases offered to candidates was not as high as in 2022 and early 2023. As a result, the conversion of offers to placements remained "the most significant challenge".

PageGroup said it expects 2025 operating profit to be broadly in line with current market consensus of £21.5m.

Chief executive Nicholas Kirk said: "We continued to experience subdued levels of sentiment and confidence in Europe, particularly in our two largest markets, France and Germany, as well as in the UK. However, we delivered a fourth consecutive quarter of growth in the US, our fourth largest market, and a second consecutive quarter of growth in Asia. Collectively, these two markets represent a quarter of the group.

"We remain committed to our strategy and continue to reallocate resources into the areas of the business where we see the most significant long-term structural opportunities. Concurrently, we continue to ensure headcount in all our markets is aligned to activity levels. Overall, our focus remains to balance near-term productivity with ensuring we are well placed to take advantage of opportunities when market conditions improve."

At 1225 BST, the shares were up 6.3% at 248.60p.

Citi, which rates the shares at 'buy' with a 440p price target, said Hays, Robert Walters and SThree all seem largely focused on productivity metrics and have seen headcount drop by double-digits year-on-year, but Pagegroup is more focused on platform preservation.

"This means that Page should be more operationally geared as and when demand recovers. Given its perm focus, Page tends to be more reluctant to reduce headcount due to an immediate net fee impact," it said.