Q3 2010 TRADING UPDATE

RNS Number : 9884T

Michael Page International PLC

07 October 2010

 



7 October 2010

Q3 2010 TRADING UPDATE

Financial Summary

·        Group Q3 gross profit of £112.7m up 37.0% (34.2%*) on Q3 2009, sequentially £1.0m or 0.9% (2.3%*) higher than Q2

·        EMEA (40% of Group) Q3 gross profit of £44.6m up 25.0% (28.1%*) on Q3 2009, sequentially £2.1m or 4.6% (2.7%*) lower than Q2

·        UK (29% of Group) Q3 gross profit of £33.0m up 20.9% on Q3 2009, sequentially £0.7m or 2.4% higher than Q2

·        Asia Pacific (18% of Group) Q3 gross profit of £20.3m up 88.0% (68.7%*) on Q3 2009, sequentially £2.3m or 12.5% (13.7%*) higher than Q2

·        Americas (13% of Group) Q3 gross profit of £14.8m up 73.7% (57.9%*) on Q3 2009, sequentially £0.1m or 1.0% (3.8%*) higher than Q2

·        Permanent (78% of Group) Q3 gross profit of £87.8m up by 49.7% (45.9%*) on Q3 2009, sequentially £0.2m or 0.3% lower (1.1%* higher) than Q2

·        Temporary (22% of Group) Q3 gross profit of £24.9m up by 5.5% (5.1%*) on Q3 2009, sequentially £1.2m or 5.5% (6.9%*) higher than Q2

·        Group headcount at 30 September 2010 of 4,193, up 333 (8.6%) on 30 June 2010.

·        3.7m shares (1.1% of share capital) purchased and cancelled in the quarter at a cost of £15.0m

·        Net cash at 30 September 2010 in the region of £71m (30 June 2010: £65.7m)

* Denotes where overseas results denominated in foreign currencies have been translated at constant rates of exchange for constant currency illustrative purposes.

Commenting on the third quarter trading, Steve Ingham, Chief Executive said:

"We achieved another strong performance in the third quarter, producing gross profit of £112.7m, up 37%, with September being our best month of the year so far. While the growth came largely from the continued improvement in permanent recruitment activity, for the first time this year we also recorded year-on-year growth in temporary recruitment.

"In the UK, Continental Europe and North America, where market conditions continued to stabilise but remained tough, we continued to perform well and will invest where we see opportunities for growth, or to take market share.

"We have achieved very strong growth in Asia, the Middle East and Latin America, where we have market leading positions and we continued to invest in these regions. During the quarter we added significantly to our headcount, opened three new offices and at the beginning of October opened in a new country, Chile, in its capital city of Santiago. These markets provide the Group with numerous opportunities for further organic growth and we will continue to invest by adding headcount, additional offices and new country openings.

"Our performance continues to benefit from our strategy of diversifying our geographical presence however, it is the nature of our business that visibility is short and there remains uncertainty over future levels of business confidence and economic activity."

Enquiries:

Michael Page International plc	01932 264144
Steve Ingham, Chief Executive
Stephen Puckett, Group Finance Director
Financial Dynamics	020 7269 7291
Richard Mountain / Susanne Yule

The company will host a presentation and conference call for analysts and investors at 9.00am today. The live presentation can be viewed by following the link:

http://event.on24.com/r.htm?e=246669&s=1&k=E3235489100C08CE539A93F2449E7CDB

The dial-in details for the conference call are as follows:

Dial-In:             [phone]
Conference ID: 876693
Please quote "Michael Page Q3 Trading Update" to gain access to the call.

The presentation and recording of the call will be available on the company's website later today at

http://investors.michaelpage.co.uk/presentations

The Group will issue its 4^th Quarter and full year trading update on 10^th January 2011.

Trading update

Michael Page International plc (MPI), the specialist recruitment consultancy, reports third quarter Group gross profit of £112.7m, a year-on-year increase of 37.0% (34.2%*) over the £82.3m in the third quarter of 2009. Sequentially, the third quarter was £1.0m (0.9% or 2.3%*) higher than the second quarter of 2010.

Group gross profit from permanent recruitment in the third quarter was £87.8m, an increase of 49.7% (45.9%*) over the £58.7m in the third quarter of 2009 and sequentially flat (-0.3%) (+1.1%*) over the £88.0m in the second quarter of 2010.

Group gross profit from temporary recruitment in the third quarter was £24.9m, an increase of 5.5% (5.1%*) over the £23.6m in the third quarter of 2009 and a sequential increase of 5.5% (6.9%*) over the £23.7m in the second quarter of 2010.

The perm/temp ratio in the third quarter was 78:22 (Q3 2009: 71:29), compared to 79:21 in the second quarter of 2010.

Group headcount increased by 333 people during the quarter (8.6%) to 4,193 at the end of September, 649 (18.3%) higher than the 3,544 at the end of September 2009.

EMEA Gross Profit (40% of Group in Q3 2010)			Growth rates
			Reported	Constant currency
Q3 2010 vs. Q3 2009	£44.6m	£35.7m	+25.0%	+28.1%
Q3 2010 vs. Q2 2010	£44.6m	£46.7m	-4.6%	-2.7%
Headcount at 30 September 1,708 (30 June 1,645) At constant rates of exchange: ·    France (15% of the Group) was higher by 31% against Q3 2009 (sequentially 6% lower than Q2 2010) ·    Germany (5% of the Group) was higher by 24% against Q3 2009 (sequentially 4% higher than Q2 2010) ·    Netherlands (4% of the Group) was lower by 8% against Q3 2009 (sequentially 4% higher than Q2 2010) ·    Italy (3% of the Group) was higher by 38% against Q3 2009 (sequentially 13% lower than Q2 2010) ·    Spain (3% of the Group) was higher by 27% against Q3 2009 (sequentially 8% lower than Q2 2010) ·    Austria, Belgium, Ireland, Luxembourg, Poland, Portugal, Russia, South Africa, Sweden, Switzerland, Turkey, U.A.E. (10% of the Group) was higher by 47% against Q3 2009 (sequentially 3% higher than Q2 2010)

In our largest region, Europe, Middle East and Africa (EMEA), representing 40% of Group gross profit, third quarter gross profit was £44.6m, an increase of 25.0% (28.1%*) over the £35.7m recorded in the third quarter of 2009.

While the third quarter is seasonally quieter, market conditions in general continued the stabilisation and gradual recovery witnessed in the first half of the year. The Netherlands remains our most challenging market, but began to exhibit signs of recovery with a small sequential increase in third quarter revenue.   In virtually all the other countries in the EMEA region we have achieved strong year-on-year growth over the third quarter of 2009. Across the 17 countries that comprise the EMEA region, headcount increased by 63.

UK Gross Profit (29% of Group in Q3 2010)			Growth rates
Q3 2010 vs. Q3 2009	£33.0m	£27.3m	+20.9%
Q3 2010 vs. Q2 2010	£33.0m	£32.3m	+2.4%
Headcount at 30 September 1,310 (30 June 1,218) ·    Finance & Accounting (15% of the Group) was 21% higher against Q3 2009 (sequentially 5% higher than Q2 2010) ·    Marketing, Sales and Retail (7% of Group) was higher by 22% against Q3 2009 (sequentially flat on Q2 2010) ·    Legal, Technology, HR and Secretarial (4% of the Group) was higher by 19% against Q3 2009 (sequentially 3% lower than Q2 2010) ·    Engineering & Manufacturing, Procurement & Supply Chain, Property & Construction (3% of the Group) was higher by 20% against Q3 2009 (sequentially 7% higher than Q2 2010)

In the UK, representing 29% of Group gross profit, third quarter gross profit was £33.0m, 20.9% higher than the £27.3m recorded in the third quarter of 2009. 

With the notable exception of the public sector, the UK market continued its slow recovery as confidence levels improved. Good year-on-year growth was achieved in all disciplines throughout the UK.  Headcount increased by 92 during the quarter, a large number of which were graduates who started at the end of the summer.

Asia Pacific Gross Profit (18% of Group in Q3 2010)			Growth rates
			Reported	Constant currency
Q3 2010 vs. Q3 2009	£20.3m	£10.8m	+88.0%	+68.7%
Q3 2010 vs. Q2 2010	£20.3m	£18.0m	+12.5%	+13.7%
Headcount at 30 September 596 (30 June: 501) At constant rates of exchange: ·    Australia and New Zealand (9% of the Group) was higher by 50% against Q3 2009 (sequentially 5% higher than Q2 2010) ·    Asia (9% of Group) was higher by 91% against Q3 2009 (sequentially 34% higher than Q2 2010)

In Asia Pacific, third quarter gross profit was a record £20.3m, an increase of 88.0% (68.7%*) over the £10.8m recorded in the third quarter of 2009 and sequentially the region grew by £2.3m (12.5% or 13.7%*). To achieve and continue the growth in gross profit, headcount increased by 95 people across the region.

In Australia and New Zealand, which represents 9% of the Group, third quarter gross profit grew by 50%*. In Asia, where market conditions continued to be strong, the businesses grew in the third quarter by 91%* and sequentially by 34%*. Across Asia Pacific we continued to add to our headcount while also opening a new office in the Admiralty Centre in Hong Kong.

Americas Gross Profit (13% of Group in Q3 2010)			Growth rates
			Reported	Constant currency
Q3 2010 vs Q3 2009	£14.8m	£8.5m	+73.7%	+57.9%
Q3 2010 vs Q2 2010	£14.8m	£14.7m	+1.0%	+3.8%
Headcount at 30 September 579 (30 June: 496) At constant rates of exchange: ·    Brazil, Mexico & Argentina (8% of the Group) was higher by 64%, against Q3 2009 (sequentially 5% higher than Q2 2010) ·    USA & Canada (5% of the Group) was higher by 48%, against Q3 2009 (sequentially 2% higher than Q2 2010)

In the Americas, third quarter gross profit was a record £14.8m, an increase of 73.7% (57.9%*) over the £8.5m recorded in the third quarter of 2009 and grew sequentially by £0.1m (1.0% or 3.8%*). Headcount in the region increased by 83 people as the businesses invested for further growth.

In North America, where market conditions remained tough, our businesses grew in the third quarter by 48% and sequentially by 2%*.  In Latin America, which is now 8% of the Group, market conditions remained strong and we continued to invest by increasing headcount in all countries. In the period we opened two Brazilian offices in Alphaville, Sao Paulo and Barra da Tijuca, Rio de Janeiro and at the beginning of October opened an office in Santiago, Chile.

Share repurchases

During the quarter, the Group purchased and cancelled 3.7m shares, representing 1.1% of share capital, at a total cost of £15m, an average cost of 404.0p per share, totalling £15.0m.

Financial Position and VAT reclaim

Save for the effects of trading in the third quarter and share repurchases as described above, there have been no other significant changes in the financial position of the Group since the publication of the half year results for the six months ended 30 June 2010.

Net cash at 30 September 2010 was in the region of £71m (30 June 2010: £65.7m).

There has been no further progress on the amended claims for a further refund of VAT and related interest.

The Group will pay the 2010 interim dividend of 2.88p per share, totalling £8.8m, on 8 October 2010.

At 30 September 2010, there were approximately 320.8m shares in issue, of which 14.9m are held by the Employee Benefit Trust. Accordingly, 305.9m shares receive dividends and hold voting rights.

The Group will issue its 2010 4^th Quarter and full year trading update on 10^th January 2011.

Cautionary statement

This Third Quarter 2010 Interim Management Statement ("IMS") 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 IMS should not be relied on by any other party or for any other purpose. This IMS 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 report 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 IMS has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to Michael Page International plc and its subsidiary undertakings when viewed as a whole.

 

END

 

 

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