United Kingdom

Recruitment firm PageGroup cuts over 1,000 positions

Recruitment business PageGroup revealed it cut 1,004 roles and saw its profits dive almost 90 per cent to £15.5million last year as the Covid-19 pandemic caused a tough time for the job market.

The FTSE 250 company saw its 2020 profits fall in all regions, including the UK, where the added problem of Brexit-related uncertainty caused a 40 per cent slump in gross profit, with big drops in both its Page Personnel and Michael Page divisions.

It also did poorly in the Americas, where the firm blamed political and social unrest in the United States and a lack of government support in South America for making a £7million operating loss compared to a £19.3million profit the year before.

PageGroup said it cut over 1,000 employees due to the impact of coronavirus, with most redundancies targeting employees who had little experience in recruitment

Meanwhile, the reintroduction of stricter lockdown restrictions in response to rising Covid-19 infection rates towards the end of the year severely impacted its performance in Europe, Middle East and Africa.

On the other hand, the company said conditions in Asia gradually improved towards the latter half of 2020, as protests in Hong Kong waned while its Mainland China business grew 15 per cent in December.

Overall revenues nonetheless fell 21.1 per cent to £1.31billion as the group's chief executive Steve Ingham warned that a 'high degree of global macro-economic uncertainty' remained across many of its territories.

Despite the impact of the crisis on its bottom line, Ingham said the government's Brexit deal and recent announcements on easing lockdown restrictions 'have provided a great deal of clarity' for the firm.

Ingham added: 'We remain confident in our strategy of maintaining our platform and continuing to invest carefully in headcount, as well as continuing to roll-out new technology and innovation.

'We are the clear leader in many of our markets, with a highly experienced senior management team, which, we believe, positions us well to take advantage of opportunities to grow and improve our business.'

AJ Bell's Russ Mould: 'Some companies may be regaining confidence as they look to the future and take a view on the likelihood of earnings growth in 2021 and beyond, which could include hiring more staff' 

PageGroup said most of its 1,004 redundancies affected employees who had little experience in recruitment and those on performance review.

Fifteen per cent of its fee-earner jobs were also cut worldwide, and many other employees took 20 per cent salary cuts, although the headcount was 882 lower at the end of 2020 after taking account of around 400 experienced hires.

It has additionally vowed to pay back £3.4million in furlough money it claimed from the UK government due to its much higher cash position of £166million against £97.8million at the end of last year.  

Even so, AJ Bell investment director Russ Mould warned that the extension of the government's furlough scheme to September 'doesn't necessarily send a positive message to recruitment companies such as PageGroup.' 

Rishi Sunak announced an extension to the furlough scheme today. AJ Bell's Russ Mould warns this could harm PageGroup's bottom line as it may make people more reluctant to find a job

He continued: 'It suggests that the country is still in a fragile state which could affect candidate confidence and thus reduce the flow of people taking the plunge and looking for a new job.

'Some companies may be regaining confidence as they look to the future and take a view on the likelihood of earnings growth in 2021 and beyond, which could include hiring more staff. 

'However, the fact that the furlough scheme is being extended could continue to make many people already in jobs nervous about wanting to look for a new opportunity.' 

PageGroup's shares ended the trading session 0.66 per cent higher at £4.90 today. 

Football news:

Perez on the semi-finalists of the Champions League and Europa League: They will not be excluded from the tournaments because of the Super League, I can assure you. We are protected by the law
Jurgen Klopp: The owners of Liverpool are not scammers. The team and I were not involved in the decision on the Super League
Florentino Perez: UEFA will not ban players from playing for national teams, don't worry. I am sure that the participants of the Super League will not be excluded from the Champions League and their own leagues
Real Madrid, Barca and Atletico will not be excluded from the championship. La Liga believes that the Super League project is not viable (COPE)
What did we learn about Super League on Monday? Bayern and Borussia will not be there, the players and coaches have not been told anything
Milner on Super League: The players do not have the right to vote. The current system is very good
Leeds striker Bamford on Super League: This is wrong, we are in shock. The noise is startling. Sorry it doesn't work that way with racism