March 7, 2018 / 7:33 AM / 2 years ago

British recruiter PageGroup warns on UK weakness, shares slump

(Reuters) - Recruitment firm PageGroup Plc (PAGE.L) warned on Wednesday that weakness in Britain, its largest market, would continue in 2018, sending its shares down as much as 8.5 percent in morning trade.

British staffing companies have seen profit eroded due in part to uncertainties over the country’s departure from the European Union next year as well as slowing economic growth.

“We remain cautious in several markets as we progress through the year: primarily in the UK, where we will focus on protecting margins,” PageGroup’s Chief Executive Officer Steve Ingham said.

The company’s gross profit in the United Kingdom last year fell 3.8 percent to 140.8 million pounds, on a constant currency basis, hurt by challenging conditions in the legal as well as sales and marketing sectors.

Smaller rival Robert Walters said last week hiring remained “somewhat cautious” in Britain, particularly London.

To offset weakness at home, PageGroup has been investing internationally, including in Germany, China, Latin America, South East Asia and the United States, where trading conditions have been better.

However, the company warned of challenges in Australia, where it has invested in staff and a new Canberra office, as well as in Brazil in 2018.

Group gross profit rose to 711.6 million pounds in 2017 from 621 million pounds a year earlier.

Ingham said he expected property and construction to become the company’s largest U.S. business over the next two years, as U.S. President Donald Trump pushes investment in infrastructure.

PageGroup, which finds candidates mainly to fill permanent positions rather than temporary roles, said the group’s number of fee earners, or recruitment consultants as opposed to support staff, rose 16.7 percent in 2017.

Revenue at constant currencies climbed 9.8 percent to 1.37 billion pounds. The company increased its total ordinary dividend by 4.3 percent to 12.50 pence.

RBC Capital Markets remained upbeat, saying PageGroup looked “the best staffing play at this point in our view.”

“It has been out of favour, has the best geographic spread and has seen strong growth acceleration. Headcount investment should pay off (too),” it added.

At 1020 GMT, the stock was down 5.7 percent at 493.8 pence.

Reporting by Radhika Rukmangadhan in Bengaluru; Editing by Amrutha Gayathri and Mark Potter

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