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UK recruiter PageGroup expects operating profit to fall in 2017
March 8, 2017 / 7:18 AM / 9 months ago

UK recruiter PageGroup expects operating profit to fall in 2017

(Reuters) - British recruitment firm PageGroup Plc (PAGE.L) reported a 12.2 percent rise in 2016 operating profit, but said it expected earnings to fall this year due to a slowdown in the domestic hiring market as the UK prepares to leave the European Union.

Chief Executive Steve Ingham warned that the uncertainties stemming from Brexit could linger on for a while.

“(Brexit) is going to take a long time and frankly nothing really much has changed so far since the decision and probably nothing much will change for a year or two,” he told Reuters.

In contrast, larger rival Hays Plc (HAYS.L) contended last month that markets had stabilised and there was a gradual improvement.

British staffing companies have benefited from growth in their international businesses, but an uncertain domestic market has weighed on their profits.

Recruiters such as PageGroup, Hays, Robert Walters Plc (RWA.L) and SThree Plc (STHR.L) are often seen as a gauge of the economy because people tend to switch jobs more frequently when confidence levels rise.

A company-compiled consensus forecast earnings before interest and tax of 98.4 million pounds this year, below the 101 million pounds it earned last year.

The company, which mainly finds candidates to fill permanent positions, said operating profit for 2016 rose to 101 million pounds from 90.1 million pounds, a year earlier.

PageGroup, which derives nearly a fourth of its profit from the UK, said gross profit from its UK business fell 3.5 percent to 146.3 million pounds in the year ended Dec. 31.

However, gross profit from the company’s European business rose 25.3 percent to 271.9 million pounds, indicating that the rest of the continent was shielded from a Brexit fallout.

“Our businesses in Continental Europe, Australasia and Latin America, excluding Brazil, all performed well,” Ingham said in a statement.

The company also raised its dividend by 4.2 percent to 11.98 pence, but it was below brokerage Liberum’s expectation of 12.08 pence.

PageGroup shares were little changed in morning trading at 418.4 pence.

($1 = 0.8208 pounds)

Reporting by Arathy S Nair and Esha Vaish in Bengaluru; Editing by Amrutha Gayathri and Sunil Nair

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