Global – PageGroup third-quarter gross profit up 14% in constant currency, FY2022 operating profit in line with expectations
October 12, 2022
International specialist recruitment firm PageGroup (MPI: LSE) reported group gross profit for the third quarter ended 30 September 2022 of £270.5 million, an increase of 14.0% in constant currency from to last year.
Steve Ingham, Chief Executive of PageGroup, said: “We continued to deliver strong growth in the third quarter with group gross profit up 14.0% compared to the third quarter of 2021, which was a significantly tougher comparator. only in the second trimester.
“We delivered a strong overall performance across the majority of our geographies, disciplines and brands, with record performances in nine countries despite generally slower summer months. We exited the quarter strongly, delivering our third month of gross profit above £100m, albeit helped by the strengthening dollar,” Ingham said.
Gross margin by region and by permanent and fixed-term contracts breaks down as follows:
|(in millions of £)||Q3 2022||Q3 2021||To change||% Constant Currency|
Ingham said Greater China, 6% of group gross profit, continued to be affected by lockdowns and restrictions, down 26% for the quarter.
“We also saw a slight weakening in customer confidence across the majority of our regions,” Ingham said. “This resulted in a small number of job cuts and slower hiring times in a number of our markets towards the end of the quarter. Temporary hiring outpaced permanent hiring as customers sought more flexibility in their resources and cost base, reflecting current economic uncertainty.
“We have continued to make targeted investments in the workforce in the markets where we have experienced the strongest growth, as well as the greatest potential for the future, which includes PageOutsourcing. Overall, we have recruited 337 employees in the third quarter, the majority of which were inexperienced hires. Combined, these factors reduced gross profit per employee, our measure of productivity, by 8% from the third quarter of 2021,” Ingham added.
Unless otherwise stated, all growth rates in the geographic analysis below are in constant currency and compared to 2021.
In EMEA, the group said good trading conditions continued into the third quarter. Germany, which was the group’s second largest market in the third quarter, achieved another record quarter, up 29%, with strong growth across all brands. The technology-focused Michael Page Interim business grew 46%.
France posted growth of 12% for both Page Personnel and Michael Page, with stronger growth in permanent hires. Benelux is up 27%, with Belgium up 33% and the Netherlands delivering a record quarter, up 25%. Southern Europe had another strong quarter, up 25% overall, Italy up 13% and Spain up 21%. The Middle East and Africa region is up 23%.
The Americas, now the group’s second largest region, reported gross profit of £52.7m, up 18.3% from Q3 2021. In the US, despite the much tougher Q3 comparator 2021, the group grew by 14%. In Latin America, the gross margin increased by 24%. Mexico, the largest country in the region, rose 18%, but Brazil fell 1% due to heightened political uncertainty resulting from recent elections. Elsewhere in Latin America, other countries grew by 50%, collectively.
In Asia Pacific, third quarter gross margin fell 3.9% from 2021 to £50.4 million. Greater China was down 26%, with Mainland China down 32%, due to continued Covid-19 lockdowns and restrictions. Hong Kong was also affected and fell 20% in the quarter. However, Southeast Asia saw growth of 17%, with all markets showing growth from the third quarter of 2021. India saw another record quarter, up 35%. Japan was down 4%, while Australia was up 7% for the quarter.
In the UK, gross margin increased by 9.5% in the quarter, with the Q3 comparator being more difficult than Q2. Activity levels in September were impacted by the period of national mourning following the Queen’s death and economic uncertainty. Page Personnel, who operate at lower salary levels and had taken longer to recover from the pandemic, rose 56%. Michael Page was down 4%.
Recently, rivals SThree and Robert Walters also reported growth in net charges (gross profit) in their third quarter updates.
Ingham said: “Looking ahead, there remains a high level of global macroeconomic and political uncertainty, particularly in relation to rising inflation in the majority of our markets. However, given our highly diversified and adaptable business model, with a cost base that can be adjusted quickly, we believe we are well positioned to progress towards our vision of being the leading specialist recruiter in each of the markets in which we operate.”
“We are pleased with the group’s performance in the third quarter and currently expect full year 2022 operating profit to be in line with the company’s compiled consensus of £204m,” Ingham added.
PageGroup shares traded at £376.60, up 1.84% on the day and 5.55% above its 52-week low of £356.80, set on September 29, 2022. The company has a market capitalization of £1.29 billion.