July 08, 2021
PageGroup (MPI:LSE), a UK-based staffing firm, in a business update, reported second quarter gross profit nearly doubled year-on-year, up 94, 1% in constant currency compared to the pandemic-affected period of the second quarter of 2020. Compared to the second quarter of 2019, the increase is 2.0%.
The company noted significant improvement in June alone, with gross margin up 11% from June 2019.
“I am pleased to report that the improved results we saw in the first quarter continued into April and May, both down 3% from 2019, broadly in line with the exit rate in March,” CEO Steve Ingham said. “We then saw a significant improvement in June, which was up 11% compared to 2019. In total, this means that the group was up 2.0% in the quarter compared to 2019. This notable improvement in Q2 was seen across the group and was achieved despite the backdrop of continued restrictions or lockdowns in many of our markets.We delivered record quarters in four of our five large high-potential markets and in 17 country. “
Gross margin in EMEA improved by 0.4% compared to the same period in 2019, before the pandemic. Gross margin in the UK decreased by 9.0% compared to the same period in 2019.
Second quarter gross profit is as follows.
|(in millions of £)||Q2 2021||Q2 2020||% change||% change constant currency|
|Europe, Middle East and Africa||107.3||63.3||69.5%||75.8%|
All growth rates mentioned below are in constant currency and compared to 2019, unless otherwise indicated.
In EMEA, the improvement in trading conditions seen in the first quarter continued in the second quarter, up 0.4% overall compared to the second quarter of 2019. down 6%.
Germany, the group’s third market, is up 26%, with a month of June up 43%. Benelux is down 9% overall, with a drop in the Netherlands of 14%, partially offset by growth in Belgium of 2%. Italy and Spain both had record quarters, up 5% and 7%, respectively. The Middle East and Africa fell 10%. Record quarters were also recorded in Poland, Portugal and Turkey.
In the UK, gross margin decreased by 9.0% in the quarter compared to 2019, an improvement from a decline of 25.1% in the first quarter. Michael Page (-4% in Q2) held up better than Page Personnel (-24% in Q2). UK performance improved in June, down just 1.7%, with Michael Page up 7%.
In Asia Pacific, second quarter gross profit increased 10.5% from 2019 to £46.0 million, a record quarter. Mainland China was up 29% for the quarter and ended June strongly, up 46%. Hong Kong, where trading conditions remained difficult, fell 16%, although this was an improvement from the first quarter. Overall, Greater China was up 10% for the quarter.
Southeast Asia had a record quarter, up 35%. Singapore was up 10%, with the other five countries in the region up 58%, collectively. Japan posted 17% growth, a record quarter and a significant improvement from 2% growth in the first quarter. India, despite being one of the countries most affected by Covid-19, also had a record quarter, growing by 47%. Australia was down 13% for the quarter.
In the Americas, despite being one of the regions most affected by Covid-19, the second quarter gross margin increased by 7.7% compared to 2019, a record quarter. The United States rose 8%, a record quarter, and ended June strongly, up 19%. In Latin America, the gross margin increased by 11%, a record quarter, after a decline of 2% in the first quarter. Mexico, the largest country in the region, was down 4% for the quarter but exited June +3%. Brazil grew by 27% over the quarter. Elsewhere in Latin America, the other countries recorded growth of 15% for the quarter, collectively, with record quarters in Argentina, Colombia and Panama.
Ingham said: “We remain confident in our strategy of sustaining and investing in our platform by continuing to invest cautiously in the workforce, as evidenced by the approximately 400 experienced hires we added in 2020, which continued in 2021 to now approach 800, as well as rolling-out new technology and innovation. Our headcount is currently down 8% from pre-pandemic levels at the end of 2019. Due to more favorable business conditions in the second quarter, as well as this reduction in our salaried headcount, our gross margin per employee is down. up 15% in Q2 2019 and 86% in Q2 2020.”
“We are the undisputed leader in many of our markets, with a highly experienced management team which we believe positions us well to take advantage of opportunities to grow and improve our business. We maintained our focus on making progress towards our long-term strategic goals,” Ingham said.
Rival recruitment firm Robert Walters also reported an upbeat business update yesterday.
“Looking ahead, there continues to be a high degree of global macro-economic uncertainty as Covid-19 remains a significant issue and restrictions remain in a number of the group’s markets,” Ingham noted. “Furthermore, at this stage of the recovery, it is not easy to determine whether the improved performance is still the result of pent-up supply and demand, or a lasting trend. However, and Despite the start of the year, our strong performance in the first half, and particularly in June, further boosted confidence in our outlook for the year.
“Subject to further unforeseen events, we now expect operating profit for the full year to be between £125m and £135m,” Ingham said.
PageGroup shares closed yesterday at £592.50, up 2.95% on the day. The company has a market capitalization of £1.92 billion.