PageGroup's profits plummet amid tariff uncertainty
- PageGroup faced a gross profit drop of 13.1% in the second quarter due to tariff-related uncertainty.
- The company cut nearly 200 jobs to reduce costs, significantly impacting its workforce.
- Despite the challenges, shares increased by 3% after the results were better than feared, but operating profit is expected to substantially decline.
In the second quarter of 2024, recruitment giant PageGroup reported significant challenges attributed to ongoing uncertainty in the jobs market due to tariffs. Despite experiencing a slight recovery in regions like the US and Asia, the firm saw its gross profit decline by 13.1%, which was a 10.5% drop when excluding currency fluctuations. The UK market specifically faced a notable decline, with gross profits dropping 14.3% to £23 million. In Europe, trading conditions worsened, particularly in France and Germany, where gross profit fell by 20% and 21%, respectively. To combat these pressures, PageGroup made decisions to further reduce costs by cutting nearly 200 roles in the second quarter alone, reducing its fee-earning team by 133 positions—representing a 2.5% decrease—to 5,163 employees. Additionally, the company eliminated 61 back office roles during this timeframe. Consequently, while shares saw a 3% increase due to the results being less severe than anticipated, PageGroup still cautioned investors of the tumultuous context that hindered performance. Nicholas Kirk, PageGroup's chief executive, indicated that these results stemmed from an environment fraught with ongoing macroeconomic uncertainties. This situation impacted the conversion of accepted job offers to actual placements, with clients exercising caution amid fluctuating confidence levels, consequently extending the time to hire. Over the first half of the year, gross profits collectively fell 12.3%, or 9.7% adjusted for currency. Looking ahead, the firm projected an operating profit for the full year to decrease significantly from £52.4 million in 2023 to about £22 million in 2024. In the UK, while deemed 'tough but stable', PageGroup continued to report challenges; the time to hire remained lengthy due to both client and candidate confidence being low. Additionally, the company decided to cut 56 roles within its UK operations between April and June, emphasizing the ongoing struggle amidst a competitive and uncertain marketplace.