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PageGroup plc (PAGE)

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Wednesday 06 October, 2021

PageGroup plc

Q3 Trading Update

RNS Number : 1251O
PageGroup plc
06 October 2021
 

 

6 October 2021

 

PageGroup plc

 

STRONG PERFORMANCE, CONTINUED INVESTMENT, PROFIT GUIDANCE INCREASED

 

Q3 Highlights

 

· Group gross profit of £228.1m, +65.4% vs. 2020 (+12.9% vs. 2019)

· Improvement in the exit rate, exiting September at +26% vs. 2019

· Gross profit per fee earner up 21% on Q3 2019

· Large, High Potential markets (40% of Group) +27% vs. 2019

· EMEA +9.9%: France -8%; Germany +33% all vs. 2019

· Asia Pacific +20.4 %: Greater China +21%; SE Asia +29%; Japan +36%; India +72% all vs. 2019

· Americas +24.6%: US +28%; Latin America +22% all vs. 2019

· UK +1.3%: Michael Page +6%; Page Personnel -13% all vs. 2019

· Increase in fee earner headcount of 329 to 5,772 (Q3 2019: 6,081)

· Strong cash position, net cash of c. £195m (Q2 2021: c. £164m, Q3 2020: c. £152m)

· Interim and special dividends of £100.2m to be paid on 13 October 2021

 

Outlook

· Full year operating profit expected to be in the region of £155m

 

 

Note: Given the magnitude of the impact of COVID-19 in 2020, we are also providing comparisons in constant currencies against 2019, to ensure the most appropriate representation of current trading.

 

Q3 Gross Profit Analysis

 



Gross Profit (£m)

Growth Rates (%)

Year-on-year

% of Group

2021

2020

2019

Reported

vs. 2020

Constant vs. 2020

Constant

vs. 2019

EMEA

46%

105.9

76.5

101.6

+38.3%

+45.8%

+9.9%

Asia Pacific

22%

48.9

30.3

44.1

+61.8%

+68.2%

+20.4%

Americas

17%

39.1

19.1

37.3

+104.2%

+113.4%

+24.6%

UK

15%

34.2

17.6

33.8

+94.3%

+94.3%

+1.3%

Total

100%

228.1

143.5

216.8

+58.9%

+65.4%

+12.9%

 

 

Steve Ingham, Chief Executive Officer, PageGroup, said:

 

"I am pleased to report that the improvement in results we saw in Q2 continued into Q3, with the Group reporting growth of 65.4% vs. 2020 and 12.9% vs. 2019. Given the magnitude of the impact of COVID-19 on 2020, we are continuing to compare our results to 2019, our record gross profit year.

 

"We exited the quarter strongly with September up 26% on 2019 compared with July and August, up 4% and 9% vs. 2019 respectively. This noticeable improvement and record performance in Q3 was seen throughout the Group and was achieved despite the backdrop of continued restrictions or lockdowns in many of our markets.

 

"We believe our strategy of maintaining and investing in our platform throughout cycles is helping us to achieve these results. Our investments include: hiring around 1,000 experienced fee earners since Q2 2020; rolling out new technologies globally such as Customer Connect, our new salesforce-based CRM system; new innovations such as our Page Insights data intelligence tool; as well as Diversity & Inclusion and strategic engagement tools to ensure our culture resonates, and is attractive to our people and potential new employees.

 

"Reflecting the continued improvement in trading conditions in Q3, we added a net 329 fee earners in the quarter, which makes a net 627 this year. We have added c. 600 experienced hires so far in 2021, which complements the c. 400 experienced hires we added in the second half of 2020. Our fee earner headcount is now currently down just 4% on the pre-pandemic level at the end of 2019.

 

"We are the clear leader in many of our markets, with a highly experienced senior management team, which we retained in 2020, and we believe, positions us well to take advantage of opportunities to grow and improve our business. We have maintained our focus on driving progress towards our long-term strategic goals.

 

"Looking ahead, there continues to be a high degree of global macro-economic uncertainty as COVID-19 remains a significant issue and restrictions remain in a number of the Group's markets. Additionally, there is further uncertainty regarding the pace of client's offices reopening, challenges in global supply chains and the inflation outlook. However, the strength of our performance in Q3, and notably in September, has further increased confidence in our outlook for the year and therefore, subject to no other unexpected events, we now expect full year operating profit to be in the region of £155m."

 

Headcount

 

In 2020 we reduced our fee earner headcount by 882, primarily those on performance reviews or those with very limited experience in recruitment. This was net of adding c. 400 experienced fee earners in 2020. We have subsequently added a further c. 600 in the first three quarters of this year. These, plus those who have joined from outside recruitment, net of attrition, mean that we have added 627 fee earners in the first three quarters of 2021. Our operational support headcount rose by 74 in Q3, and, as such, our ratio of fee earners to operational support staff was maintained at 77:23. Overall, the Group had 5,772 fee earners and a total headcount of 7,478, compared to 6,081 and 7,789 in Q3 2019 respectively.

 

Productivity

 

As a result of the more favourable trading conditions in Q3, as well as the lower fee earner headcount, our gross profit per fee earner was up 21% on Q3 2019.

 

Geographical Analysis (unless otherwise stated all growth rates are in constant currency and vs. 2019)

 

EMEA

Gross Profit (£m)

Growth Rates

(46% of Group)

2021

2020

2019

Reported vs. 2020

Constant

vs. 2020

Constant

vs. 2019

Q3

105.9

76.5

101.6

+38.3%

+45.8%

+9.9%

Unless otherwise stated, all growth rates are for the quarter in constant currency and vs. 2019

 

· France (12% of Group) -8%

Page Personnel -16%

Michael Page +8%

· Germany (11% of Group) +33%

· Benelux +4%

Belgium +8%

Netherlands +3%

· Southern Europe +20%

Italy +14%

Spain +22%

· Middle East and Africa, +15%

· September +16.9%

Headcount at 30 September 2021: 3,272 (30 September 2019: 3,344)

 

In Europe, Middle East and Africa, the improvement in trading conditions we experienced at the end of Q2 continued into Q3, which was up 9.9% overall against Q3 2019 and we exited in September +16.9%. France declined 8%, an improvement on the decline of 11% in Q2, with September showing further improvement, exiting the quarter up 5%. Conditions continued to be tougher in Page Personnel, which represents around 60% percent of France and was down 16%, compared to growth of 8% in Michael Page. Germany, the Group's third largest market, delivered another record quarter, up 33%, with September up 39%. Growth was strongest in our Technology focused Interim business, up 57% for the quarter. Benelux was up 4% overall, with Belgium up 8% and the Netherlands up 3%. Southern Europe grew 20% with Italy and Spain up 14% and 22%, respectively, with September stronger, up 21% and 33%. The Middle East and Africa was up 15% with the UAE up 26%. In line with the improved trading conditions, our fee earner headcount increased by 98 mainly in France, Germany and Spain.

 

Asia Pacific

Gross Profit (£m)

Growth Rates

(22% of Group)

2021

2020

2019

Reported vs. 2020

Constant

vs. 2020

Constant

vs. 2019

Q3

48.9

30.3

44.1

+61.8%

+68.2%

+20.4%

Unless otherwise stated, all growth rates are for the quarter in constant currency and vs. 2019

 

· Asia (17% of Group) +29%

· Greater China (8% of Group and 49% of Asia) +21%

Mainland China +34%

Hong Kong +1%

· South East Asia +29%

Singapore +15%

· Japan +36%

· India +72%

· Australia -3%

· September +36.4%

Headcount at 30 September 2021: 1,625 (30 September 2019: 1,711)

 

In Asia Pacific, gross profit for Q3 was up 20.4% to £48.9m, a second consecutive record quarter and exited in September +36.4%. Mainland China was up 34% for the quarter and exited September strongly, up 45%. Hong Kong, where trading conditions remained challenging, was up 1%, a significant improvement on the decline of 16% in Q2 and exited in September up 10%. Overall, Greater China grew 21% for the quarter. The other Large, High Potential market in the region, South East Asia, delivered another record quarter, up 29%. Singapore was up 15%, exiting the quarter in September +49% with the other 5 countries in the region growing 41% for the quarter, collectively. Japan grew 36%, a record quarter and a significant improvement from growth of 17% in Q2, exiting in September up 56%. India also delivered a record quarter, growing 72% and exiting in September up over 100%. Australia declined 3% for the quarter, although we saw an improvement in September, exiting up 7%. Our fee earner headcount in the region increased by 80 in the quarter, mainly in Australia and Mainland China.

 

Americas

Gross Profit (£m)

Growth Rates

(17% of Group)

2021

2020

2019

Reported vs. 2020

Constant

vs. 2020

Constant

vs. 2019

Q3

39.1

19.1

37.3

+104.2%

+113.4%

+24.6%

Unless otherwise stated, all growth rates are for the quarter in constant currency and vs. 2019

 

· North America (11% of Group) +26%

US +28%

· Latin America (6% of Group) +22%

Mexico +18%

Brazil +27%

· September +52.5%

Headcount at 30 September 2021: 1,313 (30 September 2019: 1,366)

 

In the Americas, despite being one of the worst COVID-19 affected regions, gross profit for Q3 was up 24.6%, a record quarter and exited in September up 52.5%. In the US, where the improvements in trading conditions we saw at the end of Q2 continued, we grew 28%, a second consecutive record quarter and exited September strongly, up 61%, with strong growth in all offices, though most significantly in Boston and Chicago. In Latin America, gross profit grew 22%, a record quarter, up from growth of 11% in Q2. Mexico, our largest country in the region, was up 18%, a record quarter and exited September strongly, up 38%. Brazil was up 27% for the quarter, in line with Q2, exiting September up 36%. Elsewhere in Latin America, the remaining countries grew 23% for the quarter, collectively, with second consecutive record quarters for Argentina, Colombia and Panama. We increased our fee earner headcount by 100 across the region in the quarter, mainly in the US and Mexico.

 

UK

Gross Profit (£m)

Growth Rate

Growth Rate

(15% of Group)

2021

2020

2019

vs. 2020

vs. 2019

Q3

34.2

17.6

33.8

+94.3%

+1.3%

Unless otherwise stated, all growth rates are for the quarter in constant currency and vs. 2019

 

· Michael Page +6%

· Page Personnel -13%

· September +15.1%

Headcount at 30 September 2021: 1,268 (30 September 2019: 1,368)

 

In the UK, gross profit grew 1.3% in the quarter, a significant improvement from a decline of 9.0% in Q2. Our more permanent focussed Michael Page business (+6% in Q3) was more resilient than our Temporary focussed Page Personnel business (-13% in Q3). The UK's performance improved in September, exiting the quarter strongly, up 15%. Our fee earner headcount increased by 51 in the quarter.

 

Financial Position

Save for the effects of Q3 trading detailed above and the forthcoming payments of the 2021 interim and special dividends of £100.2m to be paid on 13 October 2021, there have been no other significant changes in the financial position of the Group since the publication of the results for half year ended 30 June 2021. Net cash at 30 September 2021 was in the region of £195m (Q2 2021: c. £164m, Q3 2020: c. £152m)

 

Shares

At 30 September 2021 there were 328,618,774 Ordinary shares in issue, of which 10,865,302 were held by the Employee Benefit Trust (EBT). The rights to receive dividends and to exercise voting rights have been waived by the EBT over 9,386,513 shares and consequently these shares should be excluded when calculating earnings per share. The total number of voting rights in the Company is 328,618,774.

 

Cautionary Statement

 

This Third Quarter 2021 Trading Update has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The Trading Update should not be relied on by any other party or for any other purpose. This Trading Update contains certain forward-looking statements. These statements are made by the Directors in good faith based on the information available to them up to the time of their approval of this Trading Update and such statements should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. This Trading Update has been prepared for the Group as a whole and therefore gives greater emphasis to those matters that are significant to PageGroup and its subsidiary undertakings when viewed as a whole.

 

The Group will issue its Fourth Quarter Trading Update on 12 January 2022.

 

This announcement contains inside information for the purposes of article 7 of EU Regulation 596/2014 and Article 7 of Onshore Regulation (EU) 596/2014 as it forms part of domestic law by virtue of the EUWA. The person responsible for making this announcement on behalf of PageGroup is Kelvin Stagg, Chief Financial Officer.

 

Enquiries:

 

PageGroup

 

+44 (0)20 3077 8172

Steve Ingham, Chief Executive Officer


Kelvin Stagg, Chief Financial Officer




FTI Consulting

+44 (0)20 3727 1340

Richard Mountain / Susanne Yule


 

 

The Company will host a conference call and presentation for analysts and investors at 9:00am today. The live presentation can be viewed by following the link:

https://www.investis-live.com/pagegroup/61407a716fca3113003828a8/vmsl

 

Please use the following dial-in numbers to join the conference:

 

United Kingdom (Local)

020 3936 2999

All other locations

+44 20 3936 2999

 

Please quote participant access code 91 05 52 to gain access to the call.

 

A presentation and recording to accompany the call will be posted on the Company's website during the course of the morning of 6 October 2021 at:

https://www.page.com/presentations/year/2021

 

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