(Alliance News) - PageGroup PLC said Wednesday it is cancelling its final dividend in order to preserve cash amid the Covid-19 pandemic.
The recruitment firm also said its gross profit in the three months to March 31 slipped 13% year-on-year to GBP181.8 million from GBP208.9 million.
PageGroup's profit in Europe, the Middle East & Africa - where it generates 50% of group profit - decreased 13% in the first quarter to GBP91.3 million.
Asia Pacific saw an 18% dip in profit and in the UK it fell 16%. In the Americas, gross profit was down 5.8%.
To combat this, PageGroup said it is looking to cut its cost base by 20% to 25% in the second quarter.
"Given the unprecedented nature of this Covid-19 event, with many people across the world social distancing at home, our headcount is unlikely to reduce significantly in the short term through natural attrition, as was the case during the global financial crisis. The management team have been proactive in reducing headcount by 132 in the first quarter, and this is expected to fall by over 250 in April," the company said.
On top of this, PageGroup said 450 directors have agreed to reduce their salaries by 20% for the second quarter. In addition, the majority of the company's consultants, managers and operational support staff have agreed to a four-day week, salary reduction and furlough schemes where they exist.
"We are taking a number of immediate cost-saving measures, including reviewing all areas of discretionary spend, such as bonuses, staff entertainment, travel and capital expenditure," PageGroup added.
At the end of the quarter, the company had net cash of GBP83 million. PageGroup noted it generates about 60% of its revenue from temporary recruitment, with a current debtor receivable of about GBP125 million.
The company continued: "This will reduce generating an inflow of cash if our temporary business continues to decrease as we saw occur progressively during the first quarter."
As a result, PageGroup is cancelling its 9.4 pence final dividend for 2019.
The company is also suspending its 2020 guidance.
Chief Executive Steve Ingham said: "PageGroup continues to have a flexible and highly diversified business model that enables us to react quickly to changes in market conditions, albeit not to the same degree or speed as a sharp reduction in revenue.
"We are clear market leaders in many of our markets, with a highly experienced senior management team, which, we believe, positions us well to both protect our business during these extremely challenging times and take full advantage of all opportunities as and when they arise."
Shares in PageGroup were 2.6% higher in London on Wednesday at 337.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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