Jobs famine cuts recruitment firm profit by third

Apr 8 2009 by Iain Laing, The Journal

RECRUITMENT consultant Michael Page International has reported a 32.3% drop in first-quarter profits to £95m as demand for employees weakened in the downturn.

The group said UK gross profit had fallen to £28.9m from £47.1m in the three months to March 31, while group headcount decreased by 809 to 4,134, although it said it was not planning further job cuts as it continues to trim costs.

Chief executive Steve Ingham pointed out the group had generated a higher gross profit in March than in either of the previous two months. “However, market conditions continued to weaken during the first quarter of 2009, with the impact of the financial crisis now evident in virtually every market and discipline in which we operate, albeit to varying degrees,” he said.

The group has about 150 offices in 28 countries. It employs more than 1,350 people in the UK, including at Newcastle, Cardiff, and Canterbury.

Michael Page said only its UK business serving the public sector and the smallest discipline of property and construction had generated year-on-year growth in the first quarter.

Finance and accounting placements in the UK – responsible for 16% of group trading – saw profits fall 37%. Legal, technology, human resources and secretarial fell by 42%. Its staff in the UK reduced by 262 or 16% in the quarter. Panmure Gordon analyst Paul Jones said he was unconvinced trading patterns were close to levelling out.

“The job market continues to decline worldwide, with jobs being pulled and negotiations taking much longer than before due to caution from both sides.

“We believe this will continue for the remainder of the year, and could even get much worse over what could be a quiet summer.”

With no more staff cuts planned, the broker is worried costs could be out of kilter with profits until the market turns up.

Panmure has reduced its forecasts for both 2009 and 2010 to almost break-even, compared with its previous £60m profit for this year and £29.3m next year.