April 7, 2008 / 6:14 AM / 12 years ago

Michael Page sees signs of slowdown

LONDON (Reuters) - Recruitment firm Michael Page International MPI.L noted signs of a slowdown in financial sector recruiting caused by the credit crunch, sending its shares and those of rival Hays (HAYS.L) down over 5 percent.

A commuter walks to work in a file photo. REUTERS/Toby Melville

At the moment problems are confined to banking, and related financial sectors, with all other sectors growing strongly, it said on Monday. But Page’s CEO cautioned that he could not tell what would happen in the next year.

The moderated warning came after the firm, which specialises in high-margin professional and permanent staffing, reported record first-quarter profits on Monday 3.2 percent ahead of the consensus forecast, broker Collins Stewart said.

“(The problems) are almost entirely confined to banks, which represent 10 percent of our clients,” Chief Executive Steve Ingham told journalists on a conference call.

“If you go around our regional offices like Manchester, Birmingham, Weybridge, which are offices with 80-100 people, it’s business as usual. Whether I’ll be saying that in six or 12 months time I can’t tell you,” he said.

Page’s UK banking division has seen gross profits fall by “very, very low double (percentage) figures” in the first quarter compared to a year ago, Ingham said.

Overall gross profit jumped 33 percent to 140.3 million pounds in the first quarter to March 31, 3.2 percent ahead of a 136 million pound consensus forecast, Collins Stewart said.

All departments outside banking continued to grow and gross profit at its UK accounting and finance division, which includes banking, were just 1 percent lower than a year before.

Gross profit rose 6.7 percent in the UK, which makes up a third of gross profit, to 44.1 million pounds in the first quarter, down from a rise of 15.6 percent in the last quarter of 2007.

Gross profits in its engineering, supply chain, property and procurement division grew 41 percent while sales, marketing and retail rose 13 percent and legal, HR and secretarial grew 12 percent, Ingham said.

CEO Ingham believes the company’s target to have 6,000 staff by the end of 2008 is still “reasonably sensible”. Headcount stood at 5,425 on March 31.

“We forecast that 2009 will be the trough earnings year. We expect cuts to consensus numbers today,” said Collins Stewart analyst Julian Cater in a “buy” note.

Broker Panmure Gordon, which has a buy rating, said it was leaving forecasts unchanged before an analyst meeting which started at 9 a.m..

Shares in Michael Page fell 5.8 percent to 287.3p by 9:11 a.m., valuing it around 930 million pounds according to Reuters data.

Shares in recruiter Hays fell 4.4 percent by 9:18 a.m. while smaller recruiter Robert Walters (RWA.L) fell 0.5 percent.

Michael Page’s shares have halved since last summer on concerns of an economic slowdown. It posted pretax profit growth of 52 percent in 2007.

Editing by Rory Channing/Elizabeth Fullerton

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