Shares in PageGroup (LON:PAGE) rallied after the recruitment firm maintained FY26 guidance. The FTSE 250 company also flagged ‘improvement and signs of normalisation in trading’ in a number of its markets.
Despite subdued client and candidate confidence, the staffing specialist generated a better-than-expected rise in Q2 gross profit. And continued growth in the Americas and Asia Pacific offset weakness in the UK, France and Northern Europe.
PageGroup also pleased investors with news of a return to growth in Q2 in Southern Europe. However, the company also warned of a ‘high degree of uncertainty in the outlook for the rest of the year’.
A ‘good’ Q2
In constant currencies, group gross profit declined 0.2% year-on-year to £197.6 million. That marked a better-than-expected improvement on the 4.9% decline seen in Q1. However, market conditions remained mixed across the group.
PageGroup delivered a seventh consecutive quarter of growth in the US. The company also produced a fifth consecutive quarter of growth in Asia, where Greater China was up 17%, an improvement on the 11% growth witnessed in Q1.
Investors welcomed a return to growth in Southern Europe, although PageGroup continued to grapple with ‘challenging but stable’ market conditions in Northern Europe, France and the UK.
Guidance confirmed
During Q2, PageGroup pruned its fee earner headcount by 80 or 1.6%, with reductions mainly in France and Northern Europe. ‘We continued to reallocate resources into markets where we saw improvement in business confidence, such as in Asia,’ said the firm.
For FY26, PageGroup still expects to deliver operating profit of £28 million in line with the company-compiled consensus. That implies year-on-year profits improvement of almost 35%.
Uncertain outlook
‘Whilst we have seen improvement and signs of a normalisation in trading in a number of our markets,’ said CEO Nicholas Kirk, ‘there remains a high degree of uncertainty in the outlook for the rest of the year. We have a highly diversified and adaptable business model, a strong balance sheet and a cost base that is under continuous review.’
PageGroup shares are flashing red over one and five years and expectations were low heading into today’s print, which explains the rally in the stock price.
The recruiter is balancing near-term productivity with ensuring it remains well placed to take share as market conditions improve. Nevertheless, we would avoid PageGroup, which we regard as a stock to ‘rent’ rather than buy.
Despite its geographically-diversified business, PageGroup remains at the mercy of clients’ tightening recruitment budgets in many markets. And even when the fundamentals do improve, the recruitment market has changed due to the impact of AI.
Read the press release here: https://www.page.com/investors
