Yahoo Finance PageGroup Slides on Profit Warning
Shares in FTSE 250 recruitment company PageGroup (PAGE) slumped 15% today after it warned that full-year profits will be below forecasts.
In an otherwise upbeat first-half trading update, the company said that annual operating profits would now be at the lower end of the range between £156.5m - £168.0m. The company's shares dropped 76p to 429p.
Group gross profit was up nearly 10% in the first half of the financial year, with the Americas posting 20% profit growth. UK was the exception among the geographies served by PageGroup, where gross profit slipped 0.3% on the year, which the company blamed on Brexit uncertainty. Accounting and finance makes up 35% of the group’s gross profit and profit in this division rose 10% in the first half.
The firm makes up 2% of the portfolio of Liontrust Special Situations, which has a Morningstar Analysts Rating of Bronze.
Recruitment firms are closely watched in times of economic stress for signs that companies are holding back from hiring new workers and extending contracts. Still, the UK unemployment rate is at its lowest since 1974, ONS figures show, and the employment rate among women is at its highest ever at 72%.
The UK economy grew by 0.3% on a monthly basis in May, the latest ONS figures reveal, compared with a fall of 0.4% the month before. The figures have eased fears that the UK economy is creeping towards recession as Brexit looms. The European Commission puts the UK near the bottom of the league for forecasts for economic growth in 2019: the economy is expected to grow by 1.3% in 2019 and 1.3% in 2020.
The US economy added 224,000 jobs in June, much higher than forecasts and the May increase of 72,000 jobs. The Federal Reserve is still expected to start cutting interest rates this month after four rate hikes in 2018 amid signs that the economy’s recent growth is starting to come off the boil. The US makes up 16% of PageGroup's gross profit, based on first-half figures.
