Last checked at 16 Jul 2013 07:00
PageGroup
16 July 2013
Q2 AND FIRST HALF 2013 TRADING UPDATE
Q2 GROSS PROFIT ANALYSIS
Reported | Constant | ||||
Year-on-year gross profit | % of Group Q2 | Q2 2013 | Q2 2012 | % | % |
EMEA | 41% | £55.1m | £57.6m | -4.4% | -8.2% |
UK | 23% | £31.2m | £31.1m | +0.3% | +0.3% |
Asia Pacific | 21% | £28.2m | £30.6m | -7.7% | -8.0% |
Americas | 15% | £20.7m | £18.7m | +10.7% | +9.8% |
Total | 100% | £135.2m | £138.0m | -2.0% | -3.8% |
Permanent | 78% | £105.2m | £109.2m | -3.7% | -5.3% |
Temporary | 22% | £30.0m | £28.8m | +4.2% | +1.9% |
H1 GROSS PROFIT ANALYSIS
Reported | Constant | ||||
Year-on-year gross profit | % of Group H1 | H1 2013 | H1 2012 | % | % |
EMEA | 41% | £107.2m | £117.9m | -9.1% | -11.7% |
UK | 23% | £61.4m | £61.7m | -0.4% | -0.4% |
Asia Pacific | 21% | £54.3m | £56.9m | -4.5% | -4.4% |
Americas | 15% | £39.1m | £37.4m | +4.6% | +5.9% |
Total | 100% | £262.0m | £273.9m | -4.3% | -5.2% |
Permanent | 78% | £203.1m | £215.7m | -5.9% | -6.6% |
Temporary | 22% | £58.9m | £58.2m | +1.3% | -0.1% |
Commenting, Steve Ingham, Chief Executive Officer said:
"Overall PageGroup delivered a robust performance throughout the second quarter, against a backdrop of challenging market conditions across most of our regions, reporting gross profit of £135.2m, up 6.6% on the first quarter, and down only 2.0% year-on-year.
"We have made excellent progress on our key objectives following the management changes last year:
- continued investment in all of our 5 high potential markets: China, South East Asia, Germany, Latin America and the United States;
- increased focus on consistency and efficiency in our operational support teams; and
- turning around our United States business, where, as a result, we are up 30% in gross profit this year.
"During the quarter we saw good performances in a number of regions, most notably in North America. Our offices in Japan, Mexico, Spain and the Middle East also performed particularly well, as did some smaller and newer businesses in Europe, Latin America and Asia. In Australia, our business experienced a challenging quarter.
"Activity levels remained strong throughout the quarter, but with difficult conditions likely to continue in several markets, we expect Q3 will be another challenging quarter.
"As we indicated earlier in the year we continue to actively manage our cost base, both to take account of market conditions as well as to improve the Group's operating performance. As a result, headcount has reduced by 144 since the start of the year, primarily in operational support staff.
"Our focus remains fixed on our long-term growth and profit objectives. We will continue to invest in our key, high-potential markets, to manage our fee earner headcount actively reflecting market conditions and to seek out efficiencies to drive down the costs of operational support. Combined, these initiatives will deliver long-term profitable growth for our shareholders."
Enquiries:
PageGroup | 01932 264144 |
Steve Ingham, Chief Executive Officer | |
Andrew Bracey, Chief Financial Officer | |
FTI Consulting | 020 7269 7291 |
Richard Mountain / Susanne Yule |
The company will host a conference call and presentation for analysts and investors at 8.30am today. The live presentation can be viewed by following the link:
http://www1.axisto.co.uk/webcasting/investis/pagegroup/q2-2013-trading-update/
Please use the following dial-in numbers to join the conference:
Canada | 1 855 287 9927 |
France | 0800 946 508 |
Germany | 0800 588 9300 |
Italy | 800 136 791 |
Netherlands | 0800 024 9942 |
Spain | 900 803 967 |
Switzerland | 0800 740 325 |
Turkey | 00 800 142 062 110 |
United Arab Emirates | 8000 357 02 413 |
United Kingdom | 0800 368 0649 |
United States | 1 855 287 9927 |
All other locations | + 44 20 3059 8125 |
Please quote "Q2 Trading Update" to gain access to the call
The presentation and recording of the call will be available on the company's website later today at:
http://www.pagegroup.co.uk/investors/reports-and-presentations/presentations-and-webcasts/2013.aspx
The Group will issue its interim results on 13 August 2013 and the third quarter Interim Management Statement on 15 October 2013.
Group Trading Update
Michael Page International plc ("PageGroup"), delivered second quarter gross profit of £135.2m, +6.6% (+6.9%*) on Q1 2013 and -2.0% (-3.8%*) on Q2 2012 (£138.0m). Headcount reduced by 87 (-1.7%) in the quarter to 4,955 at the end of June 2013. Since the start of the year we have reduced headcount by 144, primarily in operational support.
*Denotes where overseas results denominated in foreign currencies have been translated at constant rates of exchange for constant currency illustrative purposes.
Perm/Temp mix
Group gross profit from permanent recruitment in the second quarter was £105.2m, +7.4% (+7.7%*) on Q1 2013 and -3.7% (-5.3%*) on £109.2m in Q2 2012. Group gross profit from temporary recruitment in the second quarter was £30.0m, +3.8% (+3.9%*) on Q1 2013 and +4.2% (+1.9%*) on £28.8m in Q2 2012.
The perm/temp gross profit ratio in the second quarter was 78:22 (Q1 2013: 77:23, Q2 2012: 79:21).
Discipline analysis
Reported | Constant | ||||
Year-on-year gross profit | % of Group Q2 | Q2 2013 | Q2 2012 | % | % |
Finance & Accounting | 42% | £57.0m | £57.6m | -1.0% | -2.7% |
Legal, Technology, HR, Secretarial, Healthcare | 21% | £27.8m | £27.8m | -0.0% | -1.5% |
Engineering, Property & Construction, Procurement & Supply Chain | 19% | £26.3m | £27.1m | -2.9% | -5.0% |
Marketing, Sales & Retail | 18% | £24.1m | £25.5m | -5.4% | -7.3% |
Total | 100% | £135.2m | £138.0m | -2.0% | -3.8% |
Reported | Constant | ||||
Year-on-year gross profit | % of Group H1 | H1 2013 | H1 2012 | % | % |
Finance & Accounting | 42% | £109.1m | £114.7m | -4.9% | -5.8% |
Legal, Technology, HR, Secretarial, Healthcare | 20% | £53.8m | £55.1m | -2.2% | -2.8% |
Engineering, Property & Construction, Procurement & Supply Chain | 20% | £51.4m | £53.9m | -4.6% | -5.6% |
Marketing, Sales & Retail | 18% | £47.7m | £50.2m | -5.1% | -6.2% |
Total | 100% | £262.0m | £273.9m | -4.3% | -5.2% |
Our diversification by discipline continues as we launch new businesses in all regions as well as growing in markets such as China and Latin America where we are less dependent on Finance and Accounting. The challenging market conditions impacted all disciplines to some degree.
Geographical analysis
Q2 GROSS PROFIT ANALYSIS
EMEA Gross Profit (41% of Group in Q2 2013) |
Growth rates | |||
Reported | Constant | |||
Q2 2013 vs. Q2 2012 | £55.1m | £57.6m | -4.4% | -8.2% |
Q2 2013 vs. Q1 2013 | £55.1m | £52.1m | +5.8% | +5.8% |
H1 2013 vs. H1 2012 | £107.2m | £117.9m | -9.1% | -11.7% |
Headcount at 30 June 2013: 1,881 (31 March 2013: 1,964) Gross profit at constant currency: ·; France (14% of the Group) +6% on Q1 2013 and -11% on Q2 2012 ·; Germany (6% of the Group) +4% on Q1 2013 and -18% on Q2 2012
| ||||
In our largest region, Europe, Middle East and Africa (EMEA), representing 41% of Group gross profit, market conditions remained challenging throughout the second quarter. Sequentially, we saw an increase in gross profit of +5.8%*, with both year-on-year and sequential rates improving on those seen in the first quarter. In our larger businesses of France and Germany, gross profit was up sequentially, reversing the trend from the previous quarter. While trading conditions in our Northern European businesses continued to be very difficult, good performances were seen in many other parts of EMEA, particularly Spain, Turkey, Russia, Africa, Middle East, Sweden and Portugal. Reflecting continued tough economic conditions, headcount across the region reduced during the quarter by 83, or -4.2%, of which the majority were operational support staff.
UK Gross Profit (23% of Group in Q2 2013) |
Growth rates | ||
Q2 2013 vs. Q2 2012 | £31.2m | £31.1m | +0.3% |
Q2 2013 vs. Q1 2013 | £31.2m | £30.2m | +3.4% |
H1 2013 vs. H1 2012 | £61.4m | £61.7m | -0.4% |
Headcount at 30 June 2013: 1,256 (31 March 2013: 1,261) | |||
In the UK, representing 23% of Group gross profit, our continued discipline diversification and depth of management experience continued to underpin our robust performance, with gross profits increasing +3.4% sequentially. During the quarter the strongest performances were seen from our Logistics, Procurement & Supply Chain, Buying & Merchandising, Digital, Energy and Public Sector businesses. Headcount in the UK was broadly flat, decreasing during the quarter by 5, or -0.4%.
Asia Pacific Gross Profit (21% of Group in Q2 2013) |
Growth rates | |||
Reported | Constant | |||
Q2 2013 vs. Q2 2012 | £28.2m | £30.6m | -7.7% | -8.0% |
Q2 2013 vs. Q1 2013 | £28.2m | £26.1m | +8.0% | +9.4% |
H1 2013 vs. H1 2012 | £54.3m | £56.9m | -4.5% | -4.4% |
Headcount at 30 June 2013: 1,076 (31 March 2013: 1,071) Gross profit at constant currency: ·; Asia (13% of the Group) +12% on Q1 2013 and +3% on Q2 2012 ·; Australia and New Zealand (8% of the Group) +6% on Q1 2013 and -21% on Q2 2012 | ||||
During the second quarter in our Asia Pacific region, representing 21% of Group gross profit, market conditions in Australia were challenging, but stable, as the slowdown in the Mining and Resources sector continued. Trading became more difficult as the quarter progressed in China, while our businesses in Japan and South East Asia performed strongly. Headcount across the region was broadly flat, with an increase in Asia offset by a slight fall in Australia, reflecting the trading conditions.
Americas Gross Profit (15% of Group in Q2 2013) |
Growth rates | |||
Reported | Constant | |||
Q2 2013 vs. Q2 2012 | £20.7m | £18.7m | +10.7% | +9.8% |
Q2 2013 vs. Q1 2013 | £20.7m | £18.4m | +12.0% | +12.3% |
H1 2013 vs. H1 2012 | £39.1m | £37.4m | +4.6% | +5.9% |
Headcount at 30 June 2013: 742 (31 March 2013: 746) Gross profit at constant currency: ·; Latin America (9% of the Group) +7% on Q1 2013 and flat on Q2 2012 ·; North America (6% of the Group) +21% on Q1 2013 and +30% on Q2 2012 | ||||
In the Americas, representing 15% of Group gross profit, gross profit increased by +12%* sequentially and +10%* year-on-year. Gross profit in Brazil grew sequentially and elsewhere in Latin America, apart from Argentina which remained difficult, our businesses grew strongly, particularly in Mexico.
In North America, our businesses performed extremely well, particularly in the USA, with gross profit +21%* sequentially and +30%* year-on-year. Total headcount across the Americas was broadly flat, reflecting an increase in fee earners and a fall in operational support.
Intangible assets
In May, we commenced operating our new software in Boston in the USA, and will now roll it out across the business. Accordingly, we will begin the amortisation of this intangible asset in 2013. The full year charge is expected to be c. £6m.
Headcount
Total headcount was reduced by 144 to 4,955 from year end 2012, the vast majority in operational support areas, rather than fee earners. As we invest further in the five key growth markets of China, South East Asia, Germany, North America and Latin America, we would expect fee earner headcount to increase in the second half. This should be offset by a fall in operational support staff as we continue to review processes and functions in our operational support areas.
Share capital
No share repurchases were made during the second quarter. During the quarter, 0.2m options were exercised and satisfied through newly issued shares. At 30 June 2013 there were approximately 319.4m shares in issue, of which 11.2m are held by the Employee Benefit Trust upon which dividends and voting rights are waived. Accordingly, 308.2m shares receive dividends and hold voting rights.
Financial Position
Save for the effects of trading in the second quarter described above, and the payment of a final dividend of £20.8m for 2012, there have been no other significant changes in the financial position of the Group since the publication of the results for the year ended 31 December 2012.
Net cash at 30 June 2013 is in the region of £47m (31 March 2013: £56.5m).
The Group will issue its interim results for the six months ending 30 June 2013 on the 13 August 2013, followed by its third quarter Interim Management Statement on 15 October 2013.
Cautionary statement
This Second Quarter 2013 Trading Update has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Trading Update should not be relied on by any other party or for any other purpose. This Trading Update contains certain forward-looking statements. These statements are made by the directors in good faith based on the information available to them up to the time of their approval of this report and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information.
This Trading Update has been prepared for the Group as a whole and therefore gives greater emphasis to those matters that are significant to PageGroup and its subsidiary undertakings when viewed as a whole.