The group said gross profits fell 12% on a constant currency basis to £224.3million in the three months to the end of June and worsened through the quarter
Recruitment giant PageGroup has issued a warning about its annual earnings and announced more cuts to its personnel due to the weakening global job market activity.
The company revealed a 12% fall in gross profits at £224.3million in the three months leading up to June on consistent currency basis, deteriorating throughout the quarter, ending with an 18% drop in group gross profits for June. Operating a profit of nearly £60million for the full year is anticipated by PageGroup, almost half of the £118.8million reported in 2023 and considerably below analyst’s forecasts of £90.4million.
The company said profits had been hit by “weaker than expected trading in June, recent increased geopolitical and macro-economic uncertainty and consequently a more cautious view for the second half”. Announcing a further cut of 2.7%, equivalent to 153 ‘fee earners’, to 5,598 in Q2, the recruitment firm spotlighted its European operations as bearing the majority of these reductions.
The non-operational workforce was also trimmed down by 2.4%, or 49 employees, in the same quarter. Despite shedding over 1,000 ‘fee earner’ roles in 2023, the company indicated it aims to maintain the current number of employees “to ensure we are well placed to take advantage of opportunities as sentiment and confidence improve”.
Nicholas Kirk, PageGroup’s chief executive, said: “We continued to see challenging market conditions throughout the group in the second quarter and we experienced a softening in activity levels through the quarter, particularly in terms of new jobs registered and number of interviews.”
“The conversion of interviews to accepted offers is the most significant area of challenge, as candidate and client confidence remains subdued, reflecting the macro-economic uncertainty in the majority of our markets.”
Kirk pointed out that permanent roles are taking a bigger hit than temporary positions: “Permanent recruitment continues to be impacted more than temporary, as clients seek more flexible options and permanent candidates remain reluctant to move jobs.”
The global jobs market has been weak since the dawn of 2023, with economic downturns impacting hiring. PageGroup’s latest figures reveal a concerning 17.4% fall in UK gross profits, which represent 12% of the company’s business, falling to £26.8million.
Although this is a slight improvement from the first quarter’s 19.2% decline, it remains one of the weakest performances in its worldwide operations. Discussing the UK market, PageGroup reported: “We continued to see clients deferring hiring decisions and candidates cautious about accepting offers.”
Their update also showed a downward trend across regions, with gross profits tumbling by 12.3% in Europe, Middle East and Africa, 13.5% in the Americas, and a steep 23.7% in Asia Pacific.