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CORRECTED-UPDATE 2-Michael Page profit warning shows euro zone jobs pain
October 8, 2012 / 6:56 AM / 5 years ago

CORRECTED-UPDATE 2-Michael Page profit warning shows euro zone jobs pain

(Corrects last paragraph to read ‘first-quarter’, not third quarter)

* Sees year operating profit slightly below expectations

* Q3 gross profit down 11 pct

* EMEA down 16 pct, with Italy and Spain down 22 pct

* Shares fall 1.4 percent

By Christine Murray

LONDON Oct 8 (Reuters) - British recruiter Michael Page International issued a profit warning on Monday, blaming a sharp deterioration in euro zone markets as the region’s debt crisis increasingly weighs on the real economy.

The warning raises the spectre of further bad news from the 17-country euro area, where unemployment is already running at 11.4 percent of the working population, as staffing firms are viewed by analysts as indicators of future economic trends.

“Everybody expected that EMEA (Europe, Middle East, Africa) would turn down, that’s not in dispute. What we’re seeing in Michael Page is that it appears to be turning down ahead of everybody else,” said Shore Capital analyst David O‘Brien.

Smaller rival Robert Walters last week posted a 1 percent rise in third-quarter gross profit.

Michael Page, which makes just under 40 percent of earnings from the EMEA region, said on Monday group gross profit dropped 11 percent year-on-year to 126.5 million pounds ($204.8 million)in the three months ended September.

That included a 16 percent fall in the EMEA region, which excludes Britain, and drops of 22 percent in both Italy and Spain, the biggest countries engulfed in the debt crisis.

The euro zone has endured around three years of financial turmoil, and while markets have recently been reassured by the European Central Bank’s pledge to buy government bonds, there are few signs of economic growth picking up.

“You only have to look at the headlines around Europe to see that it’s not exactly a happy place,” Michael Page Chief Executive Steve Ingham told Reuters, saying a lack of confidence in the region was impacting companies’ willingness to invest in new projects such as factories and laboratories.

“I don’t panic as a result of us being down by what I regard as a small amount in the quarter,” he added.

Michael Page, which makes over 40 percent of its profit from the finance and accounting industries, said it expected full-year operating profit to be slightly below analysts current forecasts, which are pitched around 67.7 million pounds.

At 1035 GMT, the company’s shares, which have fallen around 23 percent over the past six months, were down 1.4 percent at 359.9 pence, valuing it at about 1.1 billion pounds.


More than three quarters of Michael Page’s profit derives from placing people in permanent jobs, which, compared with the temporary market, is more affected by uncertainty as companies put off making longer term decisions.

Ingham said the group was making gradual headway in the temporary market, but emphasised its rise was a recent, developed-world phenomenon.

“In much of our world there is no such thing as a temporary professional person,” he said.

“In China, which is a very big part of our business, and in Brazil and India, we don’t do any temps,” he added.

The group saw an 11 percent fall in third-quarter profit in Britain, which accounts for almost a quarter of the group total.

Robert Walters posted an 8 percent rise in the same country, largely buoyed by its outsourcing recruitment business, a model that Ingham eschews.

“There are no margins in it,” he said. “You have to look at the overall result of those that do it and those that don’t and I have to say I think I prefer our margins and our profits.”

A survey published on Monday showed temporary job placements in Britain rose at the fastest pace in 14 months in September, after the country’s jobless rate dropped in August by the largest amount in two years.

Hays, the largest recruiter listed on Britain’s benchmark FTSE-100 index, reports on its first-quarter performance on Tuesday.

$1 = 0.6176 British pounds Reporting by Christine Murray; Editing by Rosalba O'Brien and Mark Potter

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