FIRST QUARTER 2022 TRADING UPDATE

RNS Number : 0322I

PageGroup plc

12 April 2022

 

12 April 2022

PageGroup plc

FIRST QUARTER 2022 TRADING UPDATE

ANOTHER RECORD QUARTERLY PERFORMANCE

Q1 Highlights*

· Group gross profit of £258.2m, +42.6% vs. Q1 2021

· Record performance in March, first month with gross profit in excess of £100m

· Large, High Potential markets (38% of Group) +49%

· EMEA +41.1%: France +30%; Germany +56%

· Asia Pacific +35.8%: Greater China +23%; SE Asia +56%; Japan +47%; India +79%

· Americas +56.6%: US +60%; Latin America +51%

· UK +43.4%: Michael Page +36%; Page Personnel +70%

· Productivity up 18% on Q1 2021

· Increase in fee earner headcount of 345 in Q1 to 6,427 (Q4 2021: 6,082)

· Strong cash position, net cash of c. £122m (Q4 2021: c. £154m, Q1 2021: c. £136m)

* In constant currencies vs. 2021 except where stated otherwise

CEO Succession

· In a separate announcement today, PageGroup confirms that the process to identify a successor for the CEO role has commenced

Q1 Gross Profit Analysis

		Reported (£m)			Constant
Year-on-year	% of Group	Q1 2022	Q1 2021	%	%
EMEA	50%	129.7	96.1	+35.0%	+41.1%
Asia Pacific	19%	48.7	35.8	+36.0%	+35.8%
Americas	17%	42.9	26.8	+60.4%	+56.6%
UK	14%	36.9	25.7	+43.4%	+43.4%
Total	100%	258.2	184.4	+40.0%	+42.6%
Permanent	78%	202.1	140.3	+44.1%	+46.3%
Temporary	22%	56.1	44.1	+27.1%	+31.0%

Steve Ingham, Chief Executive Officer, PageGroup, said:

"As announced separately today, having consulted with me, the Nomination Committee has decided that now is the right time to commence the process to identify my successor, and I have indicated my support for their decision. I have been privileged to lead PageGroup over the last 16 years and I am immensely proud of everything we have achieved together. While the process is ongoing, I will continue to pursue relentlessly our Vision and will look forward to handing over the reins of this incredible company to my successor in due course.

"Turning to our Q1 results, I am delighted to report that the growth we saw in 2021 continued into Q1 2022; Group gross profit was up 42.6% against 2021, with a strong broad-based performance across all our geographies, disciplines and brands. We delivered another record quarter for the Group, with record performances in 19 countries. We exited the quarter strongly, with a record in March, the first time the Group has delivered gross profit in excess of £100m.

"This ongoing improvement in Q1 was seen throughout the Group and was achieved despite the backdrop of macro-economic and geo-political uncertainty as well as continued COVID-19 restrictions in certain markets. We believe that our strategy of maintaining and investing in our platform throughout the pandemic; by investing in experienced hires; and focusing on technology and innovation, has been key to us achieving these outstanding results.

"We delivered strong levels of productivity, which was up 18% on Q1 2021. This was driven by our investment strategy, as well as favourable trading conditions. These include wage inflation and increased fee rates due to high demand for, and short supply of, candidates, as well as a shorter time to hire facilitated by video interviewing and investments in new systems.

"We continued to invest in headcount to ensure we are able to capitalise on future growth opportunities. In Q1 we added 345 fee earners, with the most significant increases in the markets where we saw the highest growth. We focused on productivity and during the quarter we successfully implemented Customer Connect, our global operating system, in France, as well as four of our countries in Latin America. We will complete the roll out of this system with the go-lives in Brazil, Mexico and Panama in Q2.

"PageGroup has minimal exposure to either Russia or Ukraine. However, we are acutely aware of the human suffering this war has brought and are committed to supporting refugees, particularly into suitable employment, where we can. We are already working with RefuAid in providing sustainable solutions to employment for refugees in the UK.

"Looking ahead, there continues to be a high degree of global macro-economic and geo-political uncertainty. However, we maintain our focus on being the leading specialist recruiter in each of the markets in which we operate. We are pleased with the Group's performance in Q1 and, at this early stage in the year, expect 2022 operating profit to be slightly ahead of company compiled consensus of £202m."

Geographical Analysis (unless stated otherwise all growth rates are vs. 2021 and in constant currency)

Large, High Potential Markets

Our 5 large, high potential geographic markets of Germany, Greater China, Latin America, South East Asia and the US continued to deliver standout results. Collectively, they represented 38% of the Group and grew 49%. Germany, Latin America and the US delivered record quarters, with South East Asia and Greater China delivering strong results, despite the recent lockdowns in Mainland China impacting growth in March.

EMEA	Gross Profit (£m)		Growth Rates
(50% of Group)	Q1 2022	Q1 2021	Reported	Constant
Q1	129.7	96.1	+35.0%	+41.1%
· France (13% of Group) +30% o  Page Personnel +28% o  Michael Page +33% · Germany (11% of Group) +56% · Benelux +48% o  Belgium +39% o  Netherlands +50% · Southern Europe +45% o  Italy +37% o  Spain +44% · Middle East and Africa +23% Headcount at 31 March 2022: 3,650 (31 December 2021: 3,447)

In Europe, Middle East and Africa, the improvement in trading conditions we experienced at the end of 2021 continued into Q1 2022, which was up 41.1% against Q1 2021. France grew 30% against Q1 2021, a new record quarter, with Michael Page up 33% and Page Personnel up 28%. Germany, the Group's third largest market, delivered another record quarter, up 56%, with strong growth across all brands. Our Technology focused Michael Page Interim business delivered standout results, growing 65%. Benelux was up 48%, with Belgium up 39%, a record quarter, and the Netherlands up 50%. Southern Europe grew 45%, with record quarters in all four countries, including Italy and Spain, which were up 37% and 44%, respectively. The Middle East and Africa was up 23%. In line with the improved trading conditions, our fee earner headcount increased by 179 mainly in Germany, Italy and Spain.

Asia Pacific	Gross Profit (£m)		Growth Rates
(19% of Group)	Q1 2022	Q1 2021	Reported	Constant
Q1	48.7	35.8	+36.0%	+35.8%
· Asia (15% of Group) +40% · Greater China (7% of Group and 46% of Asia) +23% o  Mainland China +18% o  Hong Kong +37% · South East Asia +56% · India +79% · Japan +47% · Australia +22% Headcount at 31 March 2022: 1,796 (31 December 2021: 1,709)

In Asia Pacific, gross profit for Q1 was up 35.8% against 2021 to £48.7m. Greater China grew 23% for the quarter. Mainland China was up 18%, impacted by lockdowns in March. Hong Kong, which has been slower to recover than other markets in the region, was up 37%. Our other Large, High Potential market in the region, South East Asia, delivered strong growth of 56%. India delivered a record quarter, growing 79% and Japan grew 47%. Australia grew 22% for the quarter, with March delivering our best month for the past 10 years. Our fee earner headcount in the region increased by 53 in the quarter, mainly in South East Asia and India.

Americas	Gross Profit (£m)		Growth Rates
(17% of Group)	Q1 2022	Q1 2021	Reported	Constant
Q1	42.9	26.8	+60.4%	+56.6%
· North America (11% of Group) +60% o  US +60% · Latin America (6% of Group) +51% o  Mexico +52% o  Brazil +47% Headcount at 31 March 2022: 1,498 (31 December 2021: 1,381)

In the Americas, gross profit for Q1 was up 56.6% against 2021. In the US, where the improvements in trading conditions we saw in the second half of 2021 continued, we grew 60%, a record quarter. There was strong growth in all offices, though most significantly in Boston and Houston. In Latin America, gross profit grew 51%, delivering a record quarter. Mexico, our largest country in the region, was up 52%, a record quarter. Brazil was up 47% and elsewhere in Latin America, the remaining countries grew 53%, collectively. We increased our fee earner headcount by 84 across the region in Q1, mainly in the US, Brazil and Colombia.

UK	Gross Profit (£m)		Growth Rate
(14% of Group)	Q1 2022	Q1 2021
Q1	36.9	25.7	+43.4%
· Michael Page +36% · Page Personnel +70% Headcount at 31 March 2022: 1,344 (31 December 2021: 1,301)

In the UK, gross profit grew 43.4% in the quarter. Page Personnel, which operates at lower salary levels and had been more impacted by the pandemic, was up 70%, whereas Michael Page grew 36%. Our fee earner headcount increased by 29 in the quarter.

Perm/Temp mix

Gross profit from permanent recruitment increased 44.1% in reported rates and 46.3% in constant currencies to £202.1m (Q1 2021: £140.3m). Gross profit from temporary recruitment increased 27.1% in reported rates and 31.0% in constant currencies to £56.1m (Q1 2021: £44.1m). This resulted in a ratio of permanent to temporary recruitment of 78:22 (Q1 2021: 76:24).

Headcount

As trading conditions have continued to improve, we added 345 fee earners in Q1. Our non-operations headcount rose by 105 in Q1, and, as such, our ratio of fee earners to non-operations staff was maintained at 78:22. Overall, the Group had 6,427 fee earners and a total headcount of 8,288.

Productivity

Productivity, measured as gross profit per fee earner, was up 18% on Q1 2021. This was driven by favourable trading conditions, including wage inflation and increased fee rates as a result of the high demand and short supply of candidates, as well as a shorter time to hire facilitated by video interviewing, and investments in new systems.

Financial Position

Save for the effects of Q1 trading detailed above and the purchase of shares into the Employee Benefit Trust (EBT) of c. £15m, there have been no other significant changes in the financial position of the Group since the publication of the results for the year ended 31 December 2021. Net cash at 31 March 2022 was in the region of £122m (Q4 2021: c. £154m, Q1 2021: c. £136m).

Shares

At 31 March 2022 there were 328,618,774 Ordinary shares in issue, of which 12,405,613 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 11,373,376 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 First Quarter 2022 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 Q2 results on 13 July 2022.

Enquiries:

PageGroup	[phone]
Steve Ingham, Chief Executive Officer
Kelvin Stagg, Chief Financial Officer
FTI Consulting	[phone]
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/624d4e9ea330680c004d5012/jsgtb

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

United Kingdom (Local)	020 3936 2999
All other locations	[phone]

Please quote participant access code 53 28 99 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 12 April 2022 at:

https://www.page.com/presentations/year/2022

 

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