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PageGroup benefits from falling pound

Management's focus on growing markets and costs helped get the specialist recruiter over the finishing line
March 9, 2017

As one of the UK's biggest foreign currency earners, shares in PageGroup (PAGE) were in popular demand after the nation voted to leave the European Union last summer. The plummeting pound duly delivered, lifting the specialist recruiter's revenues and operating profit by £93m and £10m, respectively, although this fairly substantial boost did come at a cost.

IC TIP: Hold at 433p

Operating profit in the UK, the group’s largest single market, fell 17 per cent to £24m after the growing uncertainty surrounding Brexit caused domestic employers to stall on hiring decisions. Fortunately, those shockwaves didn’t extend to the continent, where 13 countries posted double-digit growth during 2016.

A strong performance across Europe, particularly in key countries such as France, Germany and the Netherlands, helped PageGroup to finish the year with constant currency revenue and operating profit growth of 4 per cent and 1 per cent, respectively. Given that trading was also brutal in Brazil, the US and Canada, investors responded to flat profits and modest top-line gains in high spirits, sending the shares up 3 per cent.

Analysts at HSBC forecast pre-tax profits of £88m and adjusted EPS of 20.2p for 2017, down from £100m and 23.1p in 2016.

PAGEGROUP (PAGE)
ORD PRICE:433pMARKET VALUE:£1.41bn
TOUCH:432-433p12-MONTH HIGH:444pLOW: 153p
DIVIDEND YIELD:2.8%PE RATIO:19
NET ASSET VALUE:76p*NET CASH:£92.8m

Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20120.9957.011.910.00
20131.0164.113.810.50
20141.0580.419.311.00
2015†1.0690.721.311.50
2016†1.2010023.111.98
% change+12+10+8+4

Ex-div: 18 May

Payment: 19 Jun

*Includes intangible assets of £37.9m, or 12p a share †Excludes special dividend of 16p a share paid in October 2015 and 6.46p a share paid in October 2016