Michael Page outlook bleak as profit falls

By Rhys Jones

LONDON (Reuters) - Recruiter Michael Page (MPI.L) does not expect business to pick up in the coming months after first-quarter profit fell by a third, with slowing economies continuing to dampen demand for workers.

"I don't think we can expect it to pick up in the second-quarter. Perhaps there is a little bit more (earnings) visibility than there was but it is still days rather than weeks at the moment," Chief Executive Steve Ingham told Reuters after the company issued a trading update.

The country's second largest recruitment agency posted a gross profit of 95 million pounds for the three months to the end of March compared with 140.3 million pounds in the same period last year and sees first-quarter operating profit coming in at around 3 million pounds.

Shares in Michael Page, which have lost 30 percent of their value in the last year, pared back early losses to be 2 percent lower at 211.75 pence by 8:45 a.m., valuing the group at around 700 million pounds.

"I thought it was a satisfactory performance given the expectations. Margins were hit hard, as might be expected but they still have the cash and the key people needed to maintain their market presence and take market share ahead of the upturn," said KBC analyst Henry Carver.

The company, which specialises in placing professional staff, said gross profit from permanent placements, which make up 70 percent of the group, fell 39.3 percent during the quarter, while profit from temporary positions fell 7 percent.

PERMANENT PROBLEMS

Michael Page's gross profit fell 42.3 percent in Asia-Pacific, 38.7 percent in the UK, 26.8 percent in Europe, the Middle East and Africa and 22.6 percent in the Americas.

"In these sort of times clients and candidates tend to change their minds very quickly. It's not unusual for a company to be recruiting one minute and put things on hold the next minute, which is tough," said Ingham.

In response, the group reduced its headcount by 16 percent during the period and said it may well cut more jobs in the second quarter.

Staffing groups such as Switzerland's Adecco (ADEN.VX) and Netherlands-based USG People (USGP.AS), who both posted large fourth-quarter losses last month, as well as America's Manpower (MAN.N), have been hit as firms across the world scale back on hiring in the fight against the economic slowdown.

Michael Page's main rivals Hays (HAYS.L) and Robert Walters (RWA.L) are also struggling and have themselves reported declining profits in the last two months.

The consensus forecast on Reuters Estimates, shows analysts, on average, expect Michael Page to report a pretax profit of 34 million pounds for 2009 compared with 140 million last year.

($1=.6702 Pound)

(Editing by Jon Loades-Carter)