Michael Page profit up but job market slows

Source: Reuters

Date :07/10/2008 15:51:27

Recruiter Michael Page reported increased third-quarter profit on Tuesday but warned that the UK and U.S. job markets were slowing and the rest of the year would be challenging, sending its shares lower.

By Rhys Jones

The staffing group, which recently rejected a bid approach from Swiss rival Adecco <ADEN.VX>, said third-quarter gross profit rose 14.6 percent to 141.4 million pounds, reflecting strong overseas growth and offsetting a sluggish UK performance, especially in the struggling banking market.

Michael Page's UK division, which represents around a third of the group, delivered an 8.3 percent fall in gross profit to 44.9 million pounds in the third quarter, due to falling demand for permanent hires in the financial, retail and legal sectors.

The group said its North American businesses contracted by 7 percent during the period.

Shares in Michael Page, which have fallen over 25 percent since Adecco decided not to proceed with its bid, were trading 11.3 percent lower at 209.25 pence by 9:30 a.m.

The recruiter, which has 170 offices in 28 countries, said the outlook for Britain and North America would be tough.

"Nobody could have predicted the pretty horrific headlines we have had over the last few weeks, which has definitely impacted the confidence of professionals and clients alike. It's certainly going to be a challenging period ahead," Chief Executive Steve Ingham told Reuters in an interview.

The company, which is growing its overseas business, said its strategy of diversifying the group, both geographically and by discipline would help offset the impact of slowing markets.

"We will continue to diversify, and areas like the Middle East and India, that are very buoyant, are great opportunities for us and we'll continue to exploit them," said Ingham.

Michael Page knocked back a 1.3 billion pound takeover offer from Adecco over the summer but Ingham said the company "does not need to be acquired" and that Adecco "didn't come up with the right offer."

Analysts at broker Seymour Pierce had expected Michael Page to deliver third-quarter gross profit of 150 million pounds.

"This (performance) represents a significant slowdown in growth compared to the previous two quarters which were up by 33 percent and 26 percent, respectively," said Seymour Pierce analyst Kevin Lapwood in a research note.

The firm, which specialises in high-margin professional and permanent staffing, said it had reduced its headcount through natural attrition in the United Kingdom and the United States where activity levels were slowing.

(Edited by Simon Jessop)

LONDON (Reuters)