Last updated: July 16, 2013 5:16 pm

PageGroup fees hit by lack of hiring in Europe and Australia

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PageGroup warned that there are few signs of improvement in the jobs market, as a lack of hiring in parts of Europe and Australia depressed fees at the white-collar recruiter.

The FTSE 250 recruiter, formerly known as Michael Page, said gross profit in the six months ending June 30 was £262m, a 4.3 per cent decrease compared to the same period last year.

Fees generated from France and Germany in the second quarter were more than 10 per cent lower compared to the same quarter last year *– although fees from both markets were higher than in the first three months of this year.

“[Companies in France and Germany] are still anxious about the European economy, and hiring someone on a permanent basis is a bigger risk than in many other economies,” said Steve Ingham, chief executive.

Overall fees from Europe, the Middle East and Africa – which together account for 41 per cent of PageGroup’s gross profit – fell to £107.2m in the first half of this year, from £117.9m in the same period last year.

Mr Ingham said a 21 per cent year-on-year decline in fees from Australia and New Zealand in the second quarter was “unfortunate”.

“It’s tough for anyone operating in Australia at the moment. [Hiring in] the mining and resources sector is down. There’s very little we can do about that,” said Mr Ingham.

Hays, one of PageGroup’s peers, mirrored that sentiment last week, calling Australia “one of the toughest markets we’ve been in for about 15 months”.

Mr Ingham said it was difficult to predict when mining companies in Australia, which are cutting costs, would start hiring more staff.

However, PageGroup said gross profit grew in the second quarter year on year in the rest of its Asian operations.

In the Americas, PageGroup’s fees rose by 4.6 per cent year on year to £39.1m in the first half of this year. Mr Ingham said there was “huge scope for growth” in its American operations, which account for about 15 per cent of the group’s gross profit.

Gross profit in the UK was relatively flat in the first half of the year, compared to last year, and Mr Ingham said the recovery was “very, very slow”.

He said global cost-cutting measures, including trimming headcount and centralising PageGroup’s software, would deliver savings of “double [digit] figures in the millions” next year.

David O’Brien, an analyst at Shore Capital, said a lack of hiring in France and Germany had “dominated” PageGroup’s performance in the region.

PageGroup’s share price dipped by 1.16 per cent to close at 425p on Tuesday.

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