Investing.com -- Shares of PageGroup (LON:PAGE) fell over 4% on Monday, following the company’s fourth-quarter trading update.
“Market conditions remained challenging in Q4 and whilst most markets were sequentially stable, we experienced a further worsening in Europe, particularly in our two largest markets, France and Germany,” said Nicholas Kirk, chief executive at the PageGroup in a statement.
For the final quarter of 2024, PageGroup recorded a gross profit of £196.7 million, marking a 13% fall in constant currencies compared to the same period in 2023.
In France and Germany, gross profits fell 17% and 23%, respectively. Other regions, such as Asia-Pacific and the UK, also reported double-digit declines, further exacerbating the overall downturn.
“The picture in Q4 was expectedly weak and, consistent with weaker macro KPIs, PAGE flags France and Germany (just over 1/4 of group fees combined) as having worsened through the quarter, though we note the swing back into positivity in the US post election which may or may not presage a more sustained pick up in activity,” said analysts at RBC Capital Markets in a note.
Permanent recruitment, which constitutes 70% of the group’s business, saw a decline of 16.8% year-on-year, while temporary recruitment decreased by 14.2%.
Despite ongoing strong salary levels, the company noted that prolonged hiring processes and reduced conversion rates from interviews to job offers have adversely impacted performance.
Fee rates remained high, but tighter market conditions contributed to growing client risk aversion, further lengthening the time-to-hire.
The trading update also revealed a reduction in headcount by 130 fee earners, representing a 2.4% decrease, primarily in Europe and the UK.
“Looking ahead, a high degree of macro-economic and geopolitical uncertainty remains across the majority of our markets, notably in France and Germany,” Kirk added.
Going forward, the company expressed cautious optimism, citing investments in artificial intelligence and technology that will increase customer experiences and boost productivity. PageGroup, however, said that market uncertainties are likely to persist, limiting growth prospects.
“We would expect consensus EBIT for FY25 to move down closer to our recently reduced estimate as trading remains tough in the near term, but we still see an attractive medium-term opportunity for more patient investors,” RBC added.