Michael Page Gross Profit Up; Cuts FY Operating Profit View; Stock Plunges

(RTTNews) - Recruitment firm Michael Page International Plc. (MPI.L, MPGPF.PK) Tuesday reported increased gross profit for the third quarter, adding that currency is having an adverse impact on results. Further, the company lowered its outlook for full year operating profit, sending the shares down by around 12 percent in early morning trading.

Total gross profit for the third quarter increased 4.7 percent to 132.9 million pounds ($213.2 million) from 126.9 million pounds in the prior year.

The growth was 11.6 percent on a constant currency basis, with positive contributions from all four regions. Michael Page noted that forex headwinds lowered reported figures by 7 percent.

Group gross profit from permanent recruitment grew 6 percent to 101.4 million pounds, and temporary recruitment grew 2 percent to 31.5 million pounds. In constant currencies, permanent recruitment climbed 13 percent, ahead of temporary recruitment which was up 8 percent.

The U.K. saw a 13.7 percent increase in gross profit at 35.3 million pounds.

Asia Pacific saw a 2.9 percent growth at 28.0 million pounds, and the increase was 11.1 percent on a constant currency basis. According to the company, the EMEA region faced increased political and economic uncertainty, both in Europe and the Middle East.

Gross profit slipped 0.8 percent in the Americas to 20 million pounds, and increased 9.6 percent when currency impact is excluded.

The company made a net increase of 210 fee earners in the quarter, and expects this to have a short-term impact on productivity.

"Although the macro environment is challenging in many regions, we do believe that our strategic goals for 2015 are best achieved through this targeted headcount investment. However, this does have a short-term impact on productivity, particularly where we seek to grow our temporary businesses in Germany, France and the UK," Steve Ingham, CEO, said.

Further, the firm said it is becoming more cautious on the short-term outlook for the fourth quarter in a number of international markets.

In EMEA, confidence levels are increasingly fragile and the Asian business, although still performing well, saw its growth rate slow. Foreign exchange movements also continue to affect reported results.

Citing these factors, allied to the strong headcount investment, the firm now expects operating profit modestly lower than consensus market expectations. The previous projection was to perform in line with market expectations.

However, the outlook still shows year-on-year growth of over 20 percent in constant currencies. Operating profit was 68.2 million pounds last year.

MPI.L declined 12.1 percent in early morning trade to 365.40 pence.