Banking woes peg back profits at Michael Page

With Lloyds, HSBC, Barclays and Royal Bank of Scotland all having announced job cuts over the past two years, banking business at Michael Page in the UK was down 50 per cent year on year in the six months to June 30.

The UK, which represents more than a fifth of the group’s total profits, saw revenues drop 10 per cent to £146m, while gross profits fell seven per cent to £61.7m.

The wider group, which employs 1,200 in the UK, of which 66 are permanent staff based in Yorkshire, saw broadly flat profits of £273.9m in the period, propped up by a 17 per cent increase in profits in the Asia-Pacific region.

Shares in Michael Page, which has offices across the country, including in Leeds and Sheffield, were three per cent lower in early trading yesterday.

Marc Zwartsenburg, head of western European equity products at ING Bank, said: “The second half of the year is not a seasonally stronger half in general while also job churn is likely to come down further in our view on low candidate confidence.

“We thus do not rule out that Michael Page International might head for a profit warning in the second half.”

“We anticipate a challenging second half as we enter the seasonally quieter summer period in both Continental Europe and the UK,” chief executive Steve Ingram said yesterday.

“This is set against tough comparables and an ongoing backdrop of economic uncertainty.”

Europe, Middle East and Africa (EMEA), the group’s largest region, contributing 43 per cent of group gross profit, saw revenues increase by 0.9 per cent to £211.5m and gross profit slip by 1.9 per cent to £117.9m.

Increasing austerity measures and levels of unemployment across Southern Europe hit market confidence, Michael Page said, while the weaker euro impacted the results of the eurozone countries. During the first half of the year, Michael Page opened new offices in Casablanca, Morocco, and in Cape Town, South Africa.

The strong performance in the Asia-Pacific region was in part driven by the group’s Australian division and the strength of the mining and commodities sec- tor.

The Americas saw gross profit fall by 7.2 per cent to £37.4m, as North America was impacted by the difficulties in the financial services sector.

Mr Ingham said: “Over the last 10 years we have continued to diversify and hence have altered significantly the composition of the group, entirely through organic investment and development, with over three quarters of the group’s gross profits now generated from outside the UK.

“Our Latin America and Asia businesses combined now represent over 21 per cent of the group’s gross profit, with 36 offices across 10 countries and almost 1,200 staff.

“We continue to invest in geographic diversification where there is long-term growth potential.”

Mr Ingham said the firm’s headcount has adjusted “to reflect market conditions”.

He added: “It increased in areas where we have growth, principally Asia and our newer businesses and reduced in other areas, largely from natural attri- tion.

“This resulted in headcount remaining broadly flat through the first half.

“It is a clear priority that we continue to manage the cost base to reflect market conditions, whilst investing to create a platform for greater growth when markets improve.

“We believe strongly that we have the balance right.”

He said the group is “financially strong”, with net cash of £32.4m. Last night, Michael Page’s share price closed at XX.

n Recruitment firm Harvey Nash said it has put in a robust performance in the six months to July 31 as a rise in demand for temporary workers offset greater than expected falls for permanent staff.

The group expects to report a 15 per cent hike in revenues to £293m, with gross profits up six per cent to £41m.