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UPDATE 2-Bank scandals prolong pain for recruiter Michael Page
July 9, 2012 / 6:37 AM / 5 years ago

UPDATE 2-Bank scandals prolong pain for recruiter Michael Page

* Q2 gross profit 138 mln pounds, down 6.6 pct

* H1 gross profit 274 mln pounds, down 0.4 pct

* Expects challenging Q3 as Europe’s holiday season starts

* Sees H1 and year operating profit in line with estimates

* Shares down 4.5 percent

By Neil Maidment

LONDON, July 9 (Reuters) - Outrage aimed at some of Britain’s scandal-hit banks is likely to prolong painful financial job market conditions, recruiter Michael Page International Plc said after posting a slip in quarterly profit due to the crisis in the euro zone.

Like many recruiters, the British group, which places people in accounting, financial and legal jobs across 35 countries, is battling a slowdown in markets as clients hold off on hiring or moving jobs in light of unstable economic conditions.

The banking sector has been particularly hit and forced to cut staff.

“Banking is tough, no surprise. Let us be real, the headlines over the last few weeks, they do not help,” Chief Executive Steve Ingham told Reuters on Monday.

A scandal over the rigging of a key interest rate has reignited public anger in Britain over the banking sector, which many people blame for sending the economy into a recession from which the country is struggling to emerge.

Such resentment may harden political resolve to tighten regulatory controls on the sector, which could crimp profits.

“I think it is fair to say that the more negative the headlines, the less (banking) recruitment is going on generally,” Ingham said.

Michael Page posted a second-quarter gross profit of 138 million pounds ($214 million), 6.6 percent below what was its second-highest quarter on record in the same period in 2011, but 1.6 percent up on the quieter first quarter of 2012.

Its shares, which have shrunk from a 2012 high of 505 pence set in March, were down 4.5 percent at 348.1 pence by 0922 GMT.

While it expected full-year operating profit to be broadly in line with market estimates, the group said its third quarter was likely to be challenging, as euro-zone issues, austerity measures and high unemployment figures hit customer confidence and combine with its seasonally quieter holiday period.

NOT IMPROVING

In its largest region, Europe, Middle East and Africa, second-quarter gross profit fell 10 percent on last year, with the UK down 9 percent and Asia Pacific the only region to grow against 2011 comparators.

“Geographically, it .. reflects what we are hearing in the economic news - tougher in southern Europe particularly, clearly not improving in the UK, but elsewhere in Asia Pacific things still relatively strong,” Ingham said.

Trading conditions in banking, which represents 8 percent of group gross profit compared with 11 percent a year ago, would remain challenging, the group said, adding it would continue investing in newer markets to soften its impact.

Overall gross profit growth in its finance and accounting division, which accounts for 42 percent of the group, fell by almost 13 percent in the second quarter.

“We are trying to make sure that if we have to take the pain in a particular sector we’ve got other sectors that are growing to replace them,” said Ingham, pointing to 10 percent gross profit growth in its engineering and procurement division.

Analysts at Panmure Gordon kept a “sell” rating on the stock. “While the result for the second-quarter is ... admirable given he macro (economy) backdrop, the lack of visibility and caution regarding the third quarter leaves us still negative regarding short-term trading for both Michael Page and the recruitment market in general,” a note read.

In a Reuters interview last month, Michael Page said high-growth Asian and Latin American markets would help it ride out tough European conditions, adding it also wanted to increase its presence in Africa’s booming resource regions.

Last week rival recruiter Robert Walters posted a 3 percent dip in second-quarter gross profit as slow banking markets hit its core Asia Pacific market.

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