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PageGroup celebrates record profits

Recruitment agency has hired over 900 fee earners after slashing jobs in 2020
PageGroup celebrates record profits
  • Profit per fee earner up 44 per cent
  • Future of jobs market is still unclear

Another day, another jubilant recruitment company. Like others, PageGroup (PAGE) is celebrating bumper annual results, having reported a record operating profit of £169mn, which is ahead of its previous (boosted) guidance of £165mn. 

2020 is not a tough comparator, of course. PageGroup – like all of its peers – saw profits plunge during the first lockdown and scaled back its workforce accordingly. However, the group is now beating 2019 levels as well. That began in April 2021, and PageGroup delivered growth in constant currency terms of 2 per cent, 13 per cent and 24 per cent for quarters two, three and four last year.

Fee earner headcount has also edged ahead of pre-pandemic levels and its staff are more efficient than ever: gross profit per fee earner has risen by 44 per cent to £157,200.

Management attributed the increase in productivity to wage inflation, improvements in fee rates due to candidate shortages and quicker hiring as a result of video interviews.

So far, the tight job market has worked very much in PageGroup’s favour. However, it is possible that wage pressure may start to be felt internally. Three-quarters of group costs were employee-related in 2021, including wages, bonuses, share-based long-term incentives and training costs. If salaries continue to rise, these costs risk eating into margins. 

The geopolitical situation is more of a worry, however. Recruitment agencies are highly cyclical business and their success relies on corporate and candidate confidence. As the world gets more jittery, PageGroup’s winning streak might come to an abrupt end – although its geographical diversity should offer some protection. Hold. 

Last IC View: Hold, 600p, 9 Aug 2021

PAGEGROUP (PAGE)   
ORD PRICE:541pMARKET VALUE:£1.78bn
TOUCH:540-541p12-MONTH HIGH:691pLOW: 442p
DIVIDEND YIELD:2.8%PE RATIO:15
NET ASSET VALUE:103p*NET CASH:£51.6mn
Year to 31 DecTurnover (£bn)Pre-tax profit (£mn)Earnings per share (p)Dividend per share (p) **
20171.3711826.512.5
20181.5514232.513.1
20191.6514432.24.30
20201.3016.0-1.80nil
20211.6416737.215.0
% change+26+941--
Ex-div:19 May   
Payment:17 Jun   
*Includes intangible assets of £49mn, or 15p a share **Does not include special dividend of 26.71p