LONDON (SHARECAST) - Michael Page International, the recruitment consultant, has warned that full year operating profit will be slightly below current analyst expectations.
In its second disappointing trading update in a row, the group said gross profits were down on reduced business in the third quarter.
Steve Ingham, Chief Executive, said of the third quarter trading: As we stated in our July update and August half year results, we were anticipating a challenging second half given the seasonally quieter summer period, the tough year-on-year comparables and the ongoing backdrop of economic uncertainty. The third quarter did indeed prove to be challenging across all our regions. As a result, the group reported an 8% decrease in gross profits compared to the second quarter and, against last year, a decrease of 11%, or 7% cent before the impact of exchange rates.
He added: In most regions activity levels improved towards the end of the third quarter (Q3). However, we do anticipate another challenging fourth quarter, with economic conditions and market confidence likely to remain poor for the foreseeable future. The group continues to be financially prudent, with net cash in the region of £50m at the end of Q3.
The consensus from analysts was that full year pre-tax profits would be approximately £67.8m, putting the company on a heady price earnings ratio of 25.
This is exactly what analysts at Seymour Pierce are telling their clients this morning, even as they repeat their sell recommendation on the shares. In their own words: "For the second time in less than a year, Michael Page has warned that pre-tax profits would come below consensus expectations as conditions gradually deteriorate in most of its markets. Following our 12% downgrade, the shares are trading on an estimated 26.2x fiscal year 2012 price-to-earnings ratio, falling to an estimated 21.9x for fiscal year 2013. We continue to believe this is too high given the uncertainty. We remain SELLers of the shares."