Page shares tumble on earnings gloom
Recruitment firm PageGroup has seen shares slump after warning that 2019 earnings are set to be towards the lower end of expectations as Brexit uncertainty and trade tensions take their toll.
Shares fell 12% as the firm revealed that gross profits in the UK dropped 2.4% to £35 million in the second quarter, with its Michael Page business suffering a 6% fall as Brexit hits confidence among firms and candidates.
Overall net fees rose 7.4% at constant exchange rates to £224.6 million in the three months to June 30, but this was lower than expected.
Page chief financial officer Kelvin Stagg said: “It is clear that macro-economic conditions in a number of our regions are becoming more challenging, and, as such, we currently expect 2019 operating profit to be towards the lower end of the range of current market forecasts.”
The City had been expecting earnings in the range of £156.5 million to £168 million in 2019.
It marks the latest gloomy report from the recruitment sector, after Robert Walters reported an 8% fall in UK second-quarter gross profits and warned that “political turmoil” and Brexit uncertainty are hurting the employment market.
Page said markets including the UK, Italy and China slowed in the three months, although there was still strong growth in the US.
Gross profits fell 1% in China as confidence was hit by the escalating trade war with America, as well as social unrest in Hong Kong.
But it saw gross profits jump 22% in the US, with an “outstanding” performance in India, which saw 52% growth.
The group also revealed that fee earner headcount fell across the UK, France and China and was down 122 overall across the group in the quarter.
Over the first half, UK gross profits were 0.3% lower, while total group saw 9.5% growth higher at constant currencies.
The UK accounts for 16% of the total group and employs 1,368 consultants.