(Reuters) - Weakness in the recruitment market in Britain could extend over the next two years as uncertainty around Brexit dampens sentiment, the head of PageGroup said on Tuesday.
The company, which mainly finds candidates to fill permanent jobs, reported a record second-quarter gross profit that beat expectations, but its shares fell 2 percent to 479.1 pence by 0900 GMT (10.00 a.m. BST) because of a further decline in the British market.
Concern about political stability following last month’s election had compounded the uncertainty caused by the Brexit vote a year ago, Chief Executive Steve Ingham said.
“I think we can assume without clarity it will continue to remain a challenging market for as long as it takes and if that’s two years, then it’s two years,” Ingham told Reuters.
“Clearly we’re still doing a lot of work, but to assume that we might start to grow, I don’t see it myself,” he said, adding he had seen a particular reluctance to hire from multinationals, which accounted for 20 percent of PageGroup’s UK business.
The group reported a 4.5 percent fall in British gross profit to 36.6 million pounds for the three months to June 30, accelerating from a marginal fall in the previous quarter. Britain generates around a fifth of group profit.
PageGroup said financial services hiring fell 15 percent in Britain and the Easter holiday in April hurt temporary hiring.
The group had not seen any significant increase in the number of financial jobs in continental Europe, even though a number of financial companies had committed to moving some operations to continue serving clients in the single market.
“The large volume back-office restructuring has largely been done and a lot of that has already been moved to places like India or Eastern Europe,” he said.
“What companies are talking about is moving registered offices and very small teams of people. At the moment... we’ve not really seen any significant large volume new initiatives.”
Although PageGroup said it also remained cautious due to elections in Germany and Brazil’s economic challenges, it forecast full-year operating profit in line with current consensus of 111.5 million pounds.
Growth in Americas and continental Europe mean that group gross profit grew 7.7 percent at constant currency to 182 million pounds, topping analysts expectations of 6.4 percent growth.
PageGroup rival Hays, another large financial recruiter, will report results on Thursday.
Reporting by Esha Vaish in Bengaluru; editing by Jason Neely and Keith Weir