News Column

Michael Page Growing, But Suffers A Big Sterling Hit

August 13, 2014

Steve McGrath

LONDON (Alliance News) - Recruitment company Michael Page International PLC Wednesday reported higher profit and revenue for the first half of the year as the economic recovery drove improved hiring in its major markets, although its overseas earnings took a big hit from the strength of sterling.

The company reported a pretax profit of GBP35.6 million for the six months to June 30, up from GBP32.0 million a year earlier, as revenue rose to GBP512.2 million, from GBP503.2 million, and it felt the benefit of cost savings and efficiency programmes it undertook last year.

However, the currency hit meant revenue growth was just 1.8%, compared with 8.3% growth at constant currencies, while its operating profit grew 11%, compared with 21.4% at constant currencies.

Still, the company said it grew in all four regions in which it operates at constant currencies, and it grew strongly in its major markets in the UK, US and Greater China. It continues to struggle in Brazil and France, but the Australian market is expected to stabilise, and it said its key performance indicators are positive so far in the second half of the year.

"For the full year, if the current trend of improving growth rates is maintained and foreign exchange rates remain constant, we expect to perform in line with market expectations," it said in a statement. It gave a market expectation for 2014 operating profit of GBP82.1 million, compared with the GBP68.2 million profit it reported for 2013.

It raised its interim dividend to 3.42 pence, from 3.25 pence last year.

The company, which focuses on areas like finance, healthcare, accountancy and law, said gross profit rose 10% in the UK, and was up 11.8% and 7.8% in the Americas and Asia Pacific, respectively, at constant currencies. However, the hit from sterling strength meant that gross profit was down 4.5% in Americas and 5.5% in Asia Pacific at actual exchange rates. Growth in Europe, the Middle East and Africa was 5.2% at constant rates and 0.3% at actual rates.

The underlying growth was driven by hiring of temporary staff and low-level permanent recruitment, which the company said was a typical feature early in any economic recovery cycle.

"This gives us the confidence to continue to invest, both in infrastructure and, selectively, additional fee earners and we will continue this investment in people and infrastructure as we continue to see improving market conditions," it said.

Still, Michael Page shares were down 2.9% at 433.80 pence early Wednesday, one of the biggest fallers on the FTSE 250.

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Source: Alliance News

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