Gross profit hit by challenging second half at Michael Page

Gross profit fell 4.9 per cent to 526.9m pounds in the year ended December 31st at professional recruitment company Michael Page, financial results have shown.

The company reported that gross profit had risen by 2% year-on-year in the first half, but as market conditions deteriorated the year-on-year growth rate slowed to -5% in the second half.

Headcount reduced by 187 in 2012 and the group reported a strong balance sheet with net cash at December 31st of £61.4m. It maintained its total dividend of 10p.

Group gross margin decreased to 53.2% from 54.3% in the previous year, largely as a result of a shift in the mix of business due to growth in temporary compared to permanent placements, the company reported.

Gross profit from permanent placements fell by 6.6% to £409.7m, representing 77.8% of group gross profit.

The gross margin from permanent placements remained broadly flat at 97.1%. Gross profit from temporary placements increased by 1.6% to £117.2m, representing 22.2% of group gross profit.

The gross margin achieved on temporary placements was 20.6% and was relatively stable throughout 2012.

New businesss launched in Latin America and North AfricaMichael Page reported that new businesses launched in Colombia and Morocco and new offices opened in Cape Town, Maca, in Rio de Janeiro, Suzhou and Taipei.

CEO: group delivered 'robbust performance'Steve Ingham, Chief Executive Officer of PageGroup, said: "Despite market conditions deteriorating in the second half of 2012, the group delivered a robust performance with gross profit down 4.9% compared to 2011, a decrease of only 1.5% at constant rates of exchange.

"Trading became more challenging in the second half of the year as business confidence deteriorated. Decision-making processes and time-to-hire lengthened, shortening earnings visibility."

He added: "Although we anticipate another challenging year in 2013, we expect to see improvement in some markets as the year progresses. We are also encouraged by the sequential increase in the group's gross profit growth rate during the fourth quarter of 2012, with three of our four regions recording an improvement."

Michael Page's share price was up 4.02% to 455p at 12:47 on Tuesday.

MF