PageGroup has warned of a slump in earnings as it continued to be impacted by subdued economic confidence and a slowdown in the hiring market.
The Surrey-based recruiter now expects to report operating profits of approximately £140million in 2023, in line with consensus forecasts, compared to the record £196.1million made last year.
Its chief executive, Nicholas Kirk, said employers were taking longer to hire new talent at the same time that workers had become ‘more reluctant’ to take up posts.
Challenges: PageGroup chief executive Nicholas Kirk said employers were taking longer to hire new talent at the same time that workers had become ‘more reluctant’ to take up posts
For the first three months of this year, the company revealed gross profits rose by just 1.8 per cent to £262.7million, although they declined by 2.4 per cent on a constant currency basis.
This was despite the FTSE 250 business recording its best-ever performance across the EMEA region, the source of more than half of its earnings, thanks to record results in Germany, Spain, Turkey and Belgium.
Profits from the Asia-Pacific market declined by 17 per cent, primarily due to difficult trading conditions in China, where Covid-19 infections have spiked following the relaxation of draconian lockdown restrictions.
They also fell in the UK, with modest growth in the clerical-focused Page Personnel arm offset by a 14 per cent drop in its Michael Page division, and in the United States amid weakness in the technology and banking industries.
Like its rival Hays reported last week, PageGroup said businesses had increasingly shifted towards temporary recruitment because of more challenging trading conditions.
Successive interest rate hikes by central banks and skyrocketing energy prices due to Russia’s full-scale invasion of Ukraine and resurgence in travel have imposed a massive extra cost burden for employers.
Consequently, many businesses have imposed hiring freezes or job cuts, including recruiters such as PageGroup.
The company reduced its fee earner roster by just over 300 in the quarter, reducing headcount across all regions, having taken on hundreds more staff last year.
Nicholas Kirk said: ‘There remains a high level of global macroeconomic and political uncertainty in the majority of our markets. However, against this backdrop, we continue to see candidate shortages and good levels of vacancies.’
Companies have been struggling to attract new employees for the last couple of years amid a ‘great resignation’ of workers seeking higher salaries and better conditions.
Many have offered considerable wage increases to attract or retain talent, providing a significant financial benefit for British headhunters, whose income is typically based on the percentage of a successful candidate’s annual salary.
PageGroup shares were 0.4 per cent higher at 455.6p on Monday morning and have expanded by more than a third in the past three years.
