Staff recruitment firm Michael Page International (LSE: MPI) posted an 11% drop in first-half profits, it was reported today. Shares were down about 4% in morning trading.
For the six months ending 30 June 2013, PageGroup said group revenue fell 0.9% to £503 million, with profit before tax falling 11.3% to £32 million. The firm said the recruitment market showed signs of improvement in the second quarter, but warned that the quiet European summer would make for a challenging third quarter.
Although PageGroup said the business is profitable in all established markets, its biggest division — Europe, the Middle East and Africa — which represents 41% of gross profits, saw revenue fall 5.8% to £205.3 million in the first half.
In Britain, PageGroup’s revenue and gross profits were essentially flat, though it indicated that hiring trends in digital and the public sector were strong.
Elsewhere, the Australian business saw gross profit fall by 20% due to a slowdown in the mining and commodities industries.
Steve Ingham, Chief Executive Officer of PageGroup, said the firm will continue to invest in the five markets it’s deemed high-potential: China, Southeast Asia, Germany, Latin America, and the USA, where it’s hoping to turn around its business.
“During the six months to June 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. However, in Australia, our business experienced a difficult first half.”
Ingham said PageGroup is also continuing to focus on operational efficiency, which translated to 144 people being laid off in the first six months.
As at 30 June, PageGroup had £47.6 million in net cash on its balance sheet. It announced it will hold its interim dividend at 3.25p per share, to be paid on 4th October.
For Ingham and PageGroup, the clear objective is to be the leading specialist recruitment consultancy in each of its markets.
“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.”
The recruitment business is heavily tied to broad economic cycles, so shareholders are no doubt wanting to see PageGroup diversify its revenue streams as it gets back on track in North America and continues to expand in its other high-impact markets.
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> Jill does not own shares of any company mentioned.