PageGroup keeps turning over strongly in third quarter

Recruiter PageGroup generated higher than expected profits in the third quarter as continental Europe, the Americas and Asia all delivered strong performances to offset weakness in the UK.

Gross profits of £177.3m in the three months to 30 September were up 8.8% in constant currencies and 11.8% at reported rates. The consensus estimate of City analysts was for the second quarter's 7.7% constant currency growth to continue.

UK profits were down 7.6% to £34.9m on challenging conditions blamed on weaker client and candidate confidence levels due to Brexit negotiations and political uncertainty.

Page's strategy of investing in its five core large, high-potential markets of Greater China, Germany, Latin America, South East Asia and the US resulted in combined growth of 17% so that segment now represents more than a third of the group.

The investment has seen 290 additional fee earners added in the quarter and 566 since the start of the year, an increase of 12%.

Chief executive Steve Ingham highlighted some particularly strong performances: the US growing 29% and China 21%, while Germany was up 9% amid investment in its temporary and contract markets.

South East Asia grew 20% and Latin America 9% with some very strong performances from countries such as Argentina, Indonesia, Malaysia and Peru.

While challenging markets in Singapore and Brazil held back their respective regions, Ingham said each of these countries improved in the quarter and are now flat year-on-year.

In Asia, India and Japan grew at 18% and 31% respectively, while Australia, representing 6% of the group, was down 2%, though fee earner headcount has been increased by 17% year to date to support the management and operational changes made previously.

European Middle East and Africa overall grew 12.6% at constant currencies, with highlights being France, Page's second largest market after the UK growing 21%, while Belgium, the Netherlands, Poland and Spain all grew in excess of 15%.

"We are pleased with the strong performances across the majority of our regions," said Ingham.

"However, there remain a number of challenges as we continue through 2017 and into 2018: the UK, where we will continue to focus on protecting margins and investing in structural opportunities; Australia, where we have invested in headcount and a new office; and Brazil, which remains challenging, despite results improving from negative to flat year-on-year growth.

"Elsewhere, we continue to invest to take advantage of markets with favourable trading conditions, as well as in our Large High Potential Markets and new markets, such as India and the Nikkei market in Japan.

"We will, as always, continue to focus on driving profitable growth while being able to respond quickly to changes in market conditions."

Management's outlook for full year operating profit remains in line with current consensus, which is for operating profit of around £113m.