UPDATE 2-Michael Page sees no end to bank sector hiring freeze

Wed Apr 11, 2012 6:15am EDT

Related Topics

* Group Q1 gross profit 136 mln stg, up 6.9 pct

* Reports continued weakness in the banking sector

* Expects to deliver growth over the long-term

* Shares down 4.7 pct, top FTSE 250 faller

By Neil Maidment

LONDON, April 11 (Reuters) - British recruitment firm Michael Page International Plc sees no end to a hiring freeze in the turbulent banking sector, one of its key markets, it said on Wednesday as it posted a slowdown in group fee growth over the past month.

Shares in the company, which also warned over the effects of the euro zone debt crisis, dropped to a near two-month low.

"Clearly there are still issues around the euro zone sovereign debt and these things are influencing our business, but ... I don't think things are getting worse," Chief Executive Steve Ingham told Reuters.

"Our conclusion on March was that banking remains difficult (and) certain geographies remain more challenging than others," Ingham said, identifying Italy, Spain and Britain.

The group, which places people in accounting, financial and legal jobs, said its net fees had increased by 7 percent in the first quarter as a whole, implying a slowdown in March - a key month because it tends to be clear of holidays around the world - given fees had risen 10 percent in both January and February.

However it said it was well spread to prosper regardless.

"The diversity of the business, in terms of other professions away from banking and other geographies away from the UK and southern Europe, makes us feel that we can achieve solid growth this year," Ingham said.

Michael Page said fees in banking, which accounts for around 8 percent of group profit, fell 12 percent in the quarter, with financial clients - having cutting large swathes of jobs in 2011 - slow to start hiring again in an uncertain economic climate.

LITTLE CLARITY

The bank sector in Europe has been hit by a series of factors ranging from increased regulation to tough trading conditions, forcing many lenders to shed staff and keep a lid on hiring as part of a clampdown on costs.

Shares in Michael Page were the biggest faller on the FTSE 250 index, down 4.7 percent to 432.2 pence at 0901 GMT, having dropped to their lowest since mid February.

Panmure Gordon analysts retained a "sell" rating on the stock, saying in a research note: "First quarter results ... show some decent progress at the gross level, though give us little clarity on how the year is likely to pan out. Visibility remains limited and macro pressure suggests to us little prospect for market improvements in 2012".

The group said gross profit rose to 136 million pounds ($215.4 million) in the three months through March from 127.3 million a year ago.

It said it had achieved growth across all its regions, apart from the UK, with strong sectors such as IT, engineering and commodities in regions like Germany, France, Latin America, China and Australasia offsetting softer markets elsewhere.

Asia Pacific grew 23 percent while at the other end of the scale the UK declined by 4 percent.

Last week rival recruiter Robert Walters posted a 12 percent increase in first-quarter net fees, while Hays told Reuters it had a more optimistic global outlook with firms now hiring again.

FILED UNDER: