TIDMPAGE
RNS Number : 2581C
PageGroup plc
12 April 2017
12 April 2017
PageGroup plc
Q1 2017 TRADING UPDATE
Q1 Gross profit growth of 9.1%*
Q1 Highlights*
-- Group gross profit +9.1% (+19.7% in reported) to GBP170.3m, a record quarter for the Group
-- Comparative Q1 benefit with Easter falling in Q2 this year versus Q1 last year
-- EMEA +14.8%: France +26%, Germany +11%
-- UK flat as confidence continued to be impacted by Brexit related uncertainty
-- Asia Pacific +3.9%: Greater China +6%, SE Asia (ex Singapore) +25%, Australasia +5%
-- Americas +15.2%: North America +13%, US +16%, LatAm (ex Brazil) +31%, Brazil -3%
-- Continued challenging market conditions in Brazil, Singapore and Financial Services
-- Technical disciplines fastest growing +17.8%
-- Headcount increased 115, intake ratio of fee earners to operational support staff of 85:15
-- FX increased reported gross profit by c. GBP15m and operating profit by c. GBP3m
-- Strong balance sheet, net cash of GBP86m
* in constant currencies
Q1 GROSS PROFIT ANALYSIS
Reported (GBPm) Constant
-------------- ----------- --------------------------- ---------
Year-on-year % of Group Q1 2017 Q1 2016 % %
-------------- ----------- -------- -------- ------- ---------
EMEA 46% 78.6 61.6 +27.6% +14.8%
-------------- ----------- -------- -------- ------- ---------
UK 22% 36.4 36.4 -0.1% -0.1%
-------------- ----------- -------- -------- ------- ---------
Asia Pacific 18% 30.8 25.9 +18.8% +3.9%
-------------- ----------- -------- -------- ------- ---------
Americas 14% 24.5 18.3 +33.8% +15.2%
-------------- ----------- -------- -------- ------- ---------
Total 100% 170.3 142.2 +19.7% +9.1%
-------------- ----------- -------- -------- ------- ---------
Permanent 75% 128.0 107.2 +19.3% +8.5%
-------------- ----------- -------- -------- ------- ---------
Temporary 25% 42.3 35.0 +20.8% +10.7%
-------------- ----------- -------- -------- ------- ---------
Commenting, Steve Ingham, Chief Executive Officer said:
"The Group delivered record quarterly gross profit in Q1 of
GBP170.3m, growing 9.1% in constant currency and 19.7% in reported
rates. This was an improvement on the 3.8% growth in Q4, reflecting
an improvement in underlying trading plus the timing of Easter
being in Q2 this year, rather than in Q1 last year.
"France, having increased fee earner headcount by 17%
year-on-year, delivered an excellent quarter, with growth of 26%.
Germany continued to grow in double digits. The UK delivered a flat
result, its best performance for a year, despite client and
candidate confidence levels remaining impacted by Brexit related
uncertainty. There was continued growth in China, up 6%. Excluding
Singapore, South East Asia, another of the Group's large,
high-potential markets, delivered growth of 25%. In the US, where
we increased fee earners by 26% year-on-year, we saw a strong
improvement, up 16% and Latin America, excluding Brazil, delivered
growth of 31%.
"We continued to experience challenging market conditions in
several of our larger markets, such as Brazil, Singapore and within
Financial Services, notably in New York, although their impact on
the overall performance of the regions continues to diminish.
"The Group again benefited from positive foreign exchange
movements during Q1, which increased reported gross profit by 10.6
percentage points, or c. GBP15m. Our focus on investing in our
large, high-potential markets, as well as in businesses
experiencing strong growth, resulted in headcount growth of 115
(+1.9% on December 2016), up to a new record for the Group of
6,214.
"We are pleased with the strong performance across the majority
of our regions, but note the timing of Easter benefited the overall
quarterly result. Furthermore, there remain a number of
uncertainties as we continue through 2017, including the impact of
Brexit in the UK, elections in Europe and Brazil's ongoing
macro-economic challenges. Looking ahead, we will continue to focus
on driving profitable growth, while being able to respond quickly
to any changes in market conditions."
Group Trading Update
PageGroup delivered Q1 gross profit of GBP170.3m, up 9.1% in
constant currencies, with the benefit of Easter falling in Q2
rather than Q1. This growth rate translates to 19.7% in reported
rates, which includes a c. GBP15m benefit due to the weakening of
Sterling. In constant currencies, our Michael Page businesses were
up 7.1% and our Page Personnel businesses increased by 14.0%.
Headcount
Having increased our fee earners by 132 in Q3 2016 and by 50 in
Q4 2016, we added a further 98 during Q1 2017, primarily into our
large, high-potential markets as well as businesses where growth
was strongest. We maintained our fee earner to operational support
staff ratio at 77:23, with operational support staff increasing by
17 in Q1. This increased our headcount at a ratio of 85:15 fee
earners to operational support staff for the quarter, as we
continue to move towards our target ratio of 80:20. Fee earner
headcount at the end of Q1 2017 was 4,809 and total headcount was
6,214.
Perm/Temp mix
In constant currencies, Group gross profit from permanent
recruitment was up 8.5% in Q1, with temporary recruitment growing
faster at 10.7%. Permanent recruitment grew 19.3% in reported rates
to GBP128.0m and temporary recruitment grew 20.8% to GBP42.3m. This
resulted in a ratio of permanent to temporary recruitment of
75:25.
Q1 - Gross Profit Discipline analysis
Reported (GBPm) Constant
---------------------------------------------------------------- ----------- ---------------------------- ---------
Year-on-year % of Group Q1 2017 Q1 2016 % %
---------------------------------------------------------------- ----------- --------- -------- ------- ---------
Accounting and Financial Services 38% 65.2 55.2 +17.9% +7.8%
---------------------------------------------------------------- ----------- --------- -------- ------- ---------
Legal, Technology, HR, Secretarial, Healthcare 22% 37.5 32.0 +17.2% +6.2%
---------------------------------------------------------------- ----------- --------- -------- ------- ---------
Engineering, Property & Construction, Procurement & Supply
Chain 21% 35.8 27.7 +29.5% +17.8%
---------------------------------------------------------------- ----------- --------- -------- ------- ---------
Marketing, Sales and Retail 19% 31.8 27.3 +16.4% +6.0%
---------------------------------------------------------------- ----------- --------- -------- ------- ---------
Total 100% 170.3 142.2 +19.7% +9.1%
---------------------------------------------------------------- ----------- --------- -------- ------- ---------
The strongest performing category of disciplines was again our
technical disciplines. This outstanding performance was driven by
our Property & Construction and Engineering disciplines, which
grew 28% and 25% in constant currencies, respectively.
Geographically, these particular disciplines continued to deliver
strong performances in Europe and the US.
Geographical analysis
(Unless otherwise stated all growth rates are in constant
currency and Q1 year-on-year).
EMEA Gross Profit (GBPm) Growth Rates
------------------ ---------------------- --------------------
(46% of Group) Reported Constant
------------------ ---------- ---------- --------- ---------
Q1 2017 vs. Q1
2016 78.6 61.6 +27.6% +14.8%
------------------ ---------- ---------- --------- ---------
Headcount at 31 March 2017: 2,628 (31 December
2016: 2,553)
* France (15% of Group) +26%
* Germany (7% of Group) +11%
----------------------------------------------------------------
EMEA grew gross profit by 14.8%. France grew 26%, with growth of
19% in Michael Page and 29% in Page Personnel. Germany performed
well, up 11%, with Michael Page up 10% and Page Personnel up 12%.
Southern Europe again delivered a record quarter, up 11%, with
particularly strong performances from Spain and Portugal. Our
businesses in Benelux continued to perform well, collectively up
12%. In total, 6 countries in the region had record quarters. Our
businesses in the Middle East and Africa, representing 5% of the
region, delivered growth of 10%, driven by a strong result from
Africa, up 14%, as well as growth of 7% in the Middle East. Fee
earner headcount grew 62 in the quarter.
UK Gross Profit Growth Rate
(GBPm)
----------------------- --------------- -------------
(22% of Group)
----------------------- ------- ------ -------------
Q1 2017 vs. Q1 2016 36.4 36.4 -0.1%
----------------------- ------- ------ -------------
Headcount at 31 March 2017: 1,405 (31 December
2016: 1,411)
-------------------------------------------------------
The UK experienced another challenging quarter, although its
flat performance was an improvement on the -6.7% in Q4 2016. This
result was driven by increased consultant productivity and the
benefit of Easter falling in April this year. Candidate and client
confidence levels remain impacted by uncertainty surrounding
Brexit. Conditions were similar across Michael Page and Page
Personnel, with Michael Page flat for the quarter and Page
Personnel down 1%. Our technical disciplines were the best
performing, together growing 12%. Our private sector business,
which represented 88% of the UK, saw flat growth, whereas the
public sector, which represented 12% of the UK, declined 2%. Fee
earner headcount was down 9 in the quarter.
Asia Pacific Gross Profit Growth Rates
(GBPm)
----------------------- --------------- --------------------
(18% of Group) Reported Constant
----------------------- -------- ----- --------- ---------
Q1 2017 vs. Q1 2016 30.8 25.9 +18.8% +3.9%
----------------------- -------- ----- --------- ---------
Headcount at 31 March 2017: 1,238 (31 December
2016: 1,205)
* Asia (13% of Group) +3.6%
* Greater China (57% of Asia) +6%
* Australia / New Zealand (5% of Group) +4.7%
--------------------------------------------------------------
Asia Pacific increased 3.9%, an improvement on the +1.7% in Q4
2016. Growth in Greater China improved from +4% in Q4 2016 to +6%
in Q1 2017, benefiting mainly from the performances of our
businesses in Mainland China, which were up 11%. In Hong Kong,
where we have a much higher proportion of multi-national clients,
we continued to experience tough market conditions and consequently
were down 1%, albeit an improvement on Q3 and Q4 2016, which were
down 15% and 4%, respectively. South East Asia was down 1%, with
challenging trading conditions continuing in Singapore but record
performances from Indonesia and Malaysia. In Australasia, growth
was 4.7%. Page Personnel continued to perform well, up 8%, as did
New Zealand, which was up 28%. Fee earner headcount in the region
increased by 38 in the quarter.
Americas Gross Profit Growth Rates
(GBPm)
----------------------- --------------- --------------------
(14% of Group) Reported Constant
----------------------- -------- ----- --------- ---------
Q1 2017 vs. Q1 2016 24.5 18.3 +33.8% +15.2%
----------------------- -------- ----- --------- ---------
Headcount at 31 March 2017: 943 (31 December 2016:
930)
* North America (8% of Group) +13%
* Latin America (6% of Group) +19%
* Brazil (34% of LatAm) -3%
--------------------------------------------------------------
The Americas was our fastest growing region, up 15.2%, a
significant improvement on Q4 2016 (+0.9%). North America, driven
by the US, grew 13%. We continued to diversify our business in the
US, with growth in the quarter of 16%. Excluding New York Financial
Services, the US grew 31%, with particularly strong performances
from Boston, Chicago and Los Angeles, driven by a 26% increase in
fee earner headcount year-on-year. In Latin America, we continued
to experience contrasting market conditions. Brazil, which in Q1
represented 34% of Latin America, decreased by 3%, an improvement
on Q4 2016 (-11%), though with softer comparators. Excluding
Brazil, the rest of the region grew 31%, with Mexico, our largest
business in Latin America in terms of fee earners, up 30%, and
Argentina and Peru, combined up 58%, both delivering record
quarters. Fee earner headcount for the Americas region was up 7 in
the quarter.
Financial Position
Save for the effects of trading in Q1 described above, there
have been no other significant changes in the financial position of
the Group since the publication of the results for the year ended
31 December 2016.
Net cash at 31 March 2017 was c. GBP86m (31 December 2016:
GBP93m).
Shares
At 31 March 2017 there were 326,002,955 Ordinary shares in
issue, of which 16,542,545 were held by the EBT. The rights to
receive dividends and to exercise voting rights have been waived by
the EBT over 14,638,760 shares and consequently these shares should
be excluded when calculating earnings per share. The total number
of voting rights in the Company is 326,002,955.
Conference Call / Presentation
The Company will host a conference call and presentation for
analysts and investors at 8.30am today. The live presentation can
be viewed by following the link:
http://www.investis-live.com/pagegroup/58e23b9c4e70e30b00bcceb4/d8ey2
Please use the following dial-in numbers to join the
conference:
United Kingdom (Local) 020 3059 8125
All other locations +44 20 3059 8125
Please quote "PageGroup" to gain access to the call.
A presentation and recording to accompany the call will be
posted on the Company's website during the course of the morning of
12 April 2017 at:
http://www.pagegroup.co.uk/investors/reports-and-presentations/presentations-and-webcasts/2017.aspx
Financial Calendar
The Group will issue its Q2 Trading Update on 11 July 2017.
Enquiries:
+44 (0)1932 264
PageGroup 446
Steve Ingham, Chief Executive
Officer
Kelvin Stagg, Chief Financial
Officer
FTI Consulting +44 (0)20 3727 1340
Richard Mountain / Susanne
Yule
Cautionary statement
This Q1 2017 Trading Update has been prepared solely to provide
additional information to shareholders to assess the Group's
strategies and the potential for those strategies to succeed. This
Trading Update should not be relied on by any other party or for
any other purpose. This Trading Update contains certain
forward-looking statements. These statements are made by the
Directors in good faith based on the information available to them
up to the time of their approval of this report and such statements
should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any
such forward-looking information.
This Trading Update has been prepared for the Group as a whole
and therefore gives greater emphasis to those matters that are
significant to PageGroup and its subsidiary undertakings when
viewed as a whole.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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