ii view: tariffs force recruiter PageGroup to ditch guidance

First-quarter results to 31 March

• Currency adjusted permanent hire gross profit down 9.9% to £140.4 million
• Currency adjusted temporary hire gross profit down 7.1% to £53.8 million
• Overall gross profit on a currency adjusted basis down 9.2% year-over-year to £194.2 million
• Net cash of £54 million, down from £95 million in late December

Chief executive Nicholas Kirk said:

"The slower end to Q4 2024 continued into Q1 2025, albeit the majority of our markets were sequentially stable in economic conditions which remained challenging. The conversion of interviews to accepted offers remained the most significant challenge, as ongoing macro-economic uncertainty continued to impact confidence, which extended time-to-hire.

"Despite the uncertain outlook due to the increasingly unpredictable economic environment, PageGroup has a highly diversified and adaptable business model, a strong balance sheet and our cost base is under continuous review.”

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ii round-up:

Recruitment agency PageGroup (LSE:PAGE) today offered no future profit forecast given the recent introduction of US trade tariffs and the resultant market uncertainty, but flagged continued subdued levels of client and candidate confidence. 

First-quarter profit to 31 March fell 9.2% year-over-year to £194.2 million compared with City estimates of £197 million. Pages’s staff fee earning headcount was cut by 1.4% during the quarter to 5,296, with cost savings of £15 million per annum targeted. 

Shares in the FTSE 250 company fell 4% in UK trading having come into this latest news down by around a quarter year-to-date. That’s similar to smaller rival Robert Walters (LSE:RWA) and comfortably ahead of a 13% fall for the FTSE 250 index itself in 2025.

Page helps companies across 25 different sectors, including accountancy, technology and engineering, to hire staff via its brands Page Personnel and Michael Page.

Currency adjusted profit for its Americas region, generating around a fifth of group’s total, gained 3.3% to £37 million, helped by a 5% improvement in the US. 

Profit for every other region on the same basis, and including its biggest European, Middle East and African region (EMEA) at 55% of overall profits, fell by low double digits. 

PageGroup’s net cash position of £54 million reduced from £95 million as of 31 December. Broker UBS reiterated its ‘buy’ stance on the shares post the results. 

A second-quarter trading update is likely to be announced early to mid-July. 

ii view:

Started in 1976 and headquartered in Weybridge, Surrey, Page is today focused on the recruitment of specialist, generally 'white-collar' staff. Located in more than 30 countries, the EMEA region generated its biggest slice of profits during this latest quarter, pushed by 13% contributions each from France and Germany. Asia accounts for a further 14% of profits, of which almost a third is from China, with the UK a 12% contribution. 

For investors, the introduction of trade tariffs initiated by the US now offers significant uncertainty about future prospects for companies and therefore their staff hiring plans. Key markets such as France and Germany have been under pressure to reduce government debt, potentially raising taxes and reducing customer demand. A forecast price/earnings (PE) ratio above the three-year average may suggest the shares are still not obviously cheap, while dividend cover of under one may raise potential for the dividend to be reduced at some point. 

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More favourably, Page has the experience of operating within economic downturns previously. Diversity of both underlying client industries and geographical regions exists. The group’s cost base is flexible, with personnel numbers being reduced, while net cash of £54 million should help support a forecast dividend yield of over 6%. 

In all, a trade war crisis could be diluted as quickly as it was introduced and Page has an attractive dividend yield. However, while there are reasons for investors to watch the story unfold, the absence of any guidance is clearly a worry in the short term. 

Positives: 

• Business sector and geographical diversity
• Flexible cost base

Negatives:

• Economic outlook uncertainty
• Currency moves can hinder

The average rating of stock market analysts:

Buy