PageGroup slashes profit outlook as workers turn down job offers

PageGroup slashes profit outlook as workers turn down job offers

  • PageGroup now anticipates making operating profits of £125m-£130m this year
  • In the third quarter, the Surrey-based firm’s gross profits fell by 7.9% to £242.2m
  • The company’s profits declined across the UK, USA and Asia-Pacific territories

PageGroup has cut its annual forecast due to employers scaling back hiring and more jobseekers rejecting offers.

The recruiter now anticipates making operating profits of £125million to £130million this year, compared to previous guidance of £137.6million and discounting £5million in one-off cost-cutting measures.

In the third quarter of 2023, the company said gross profits fell by 7.9 per cent on a constant currency basis to £242.2million as strong part-time recruitment levels were offset by a continued downturn in the permanent employment market.

Better deal: PageGroup said more job candidates were turning down work offers by way of employer buybacks – counter-proposals made by firms to try and persuade staff to stay

Although labour shortages are still encouraging businesses to implement wage hikes, Surrey-based PageGroup said the rate of salary increases was down on last year.

More job candidates are turning down work offers, driven by employer buybacks – counter-proposals made by firms to try and persuade staff to stay.

These challenging market conditions have particularly impacted PageGroup’s UK arm, which saw gross profits slump by 18.9 per cent to £30.3million for the three months ending September.

Profits from the Asia-Pacific region also dropped significantly, primarily due to a real estate crisis and subdued consumer spending slowing China’s economic recovery.

And they plunged by a quarter in the United States even though the country’s jobs market and economy remain relatively resilient.

Nicholas Kirk, PageGroup’s chief executive, warned that a ‘heightened degree of uncertainty’ existed over the short term because of a sluggish end to the last quarter.

But he added: ‘We have a highly diversified and adaptable business model, a strong balance sheet, and our cost base is under continuous review and can be adjusted rapidly to match market conditions.

‘Given these fundamental strengths, we believe we will continue to perform well in these challenging markets, and we are confident in our ability to implement our new strategy driving the long-term profitability of the group.’

PageGroup shares shrank 3.6 per cent to 408.8p by early Wednesday afternoon, making them a top five faller on the FTSE 250 Index.

PageGroup’s results come a day after fellow recruiter Robert Walters also reported a substantial drop in third-quarter profitability.

The white-collar specialist revealed that net fee income declined by 13 per cent as a result of weaker performances across all markets, with trade in the UK hit by tougher conditions in the technology and financial services sectors. 

In concert with other recruitment firms, PageGroup and Robert Walters have pared staff numbers in response to the subdued jobs market.

The former has slashed around 1,000 roles over the past 12 months, while the latter has cut 156 positions since the end of last December.

It marks a dramatic departure from the period succeeding the gradual loosening of Covid-related restrictions when Britain’s recruiters embarked on a hiring boom as the global employment market bounced back.