UPDATE: Michael Page Beats Forecasts As Confidence Improves

9th Jul 2010 09:54

(Adds detail, comment.) By Anita Likus Of DOW JONES NEWSWIRES LONDON (Dow Jones)--The U.K.'s second largest recruiter Michael Page International PLC (MPI.LN) Friday beat expectations with continued strong earnings in the second quarter, as improved business confidence led to more activity in permanent recruitment. The company, which returned to growth in the fourth quarter last year, beat analysts' forecasts and posted stronger figures than rival Hays PLC (HAS.LN), which reported earnings Thursday, as a result of its international spread and diversity. Chief Executive Steve Ingham said, "We have no single exposure to markets or disciplines. This growth is a direct result of the diversity of our business." Ingham said nearly every market is growing around the world, and "in Asia Pacific and Latin America we're flying," but he remained cautious about growth in Europe and the U.K. Michael Page cautioned that economic activity may be threatened by fiscal consolidation in the U.K. and Europe and that visibility for recruiters remains low, echoing caution from Hays' Finance Director Paul Venables Thursday. While both companies have very limited exposure to the public sector, large scale job losses expected in the government's Autumn spending review could hit overall confidence and reduce individual appetite for changing jobs. Still, after two years of struggling as the credit crunch and subsequent recession caused companies to contract and stop hiring, both Michael Page and Hays, which returned to growth this quarter, are starting to see positive signs in the market. At 0750 GMT Michael Page shares were up 12 pence, or 3.2%, at 398 pence in a slightly higher London market. Seymour Pierce analyst Caroline de la Soujeole said Michael Page's rise in second-quarter gross profit "is significantly better than expected," and ahead of rival Hays. She expects to upgrade her forecasts and has lifted her rating on the stock to hold from sell. Michael Page said second quarter gross profit was GBP111.5 million, a 33% rise from last year and up 14% from the first quarter. Permanent recruitment, which accounts for 79% of group gross profit, rose 51% year on year, or 17% sequentially while temporary recruitment fell 8.3% or 3.2% on the first quarter. The company has also increased headcount by 201 people since March 31 and it now stands at 3,860. The strongest growth came from the Asia Pacific region and the Americas. Asia Pacific gross profit rose 85% while the Americas rose 88% year on year. Michael Page reported a 22% increase in gross profit in the Europe Middle East and Asia region, which makes up 42% of the group and in the U.K. gross profit rose 14%. Michael Page shares closed Thursday at 386 pence valuing the company at GBP1.14 billion. They have fallen 9% in the past three months on fears that government cuts will hit consumer confidence and stop people from changing jobs. -By Anita Likus, Dow Jones Newswires; +44 20 7842 9407; [email protected] (END) Dow Jones Newswires July 09, 2010 04:54 ET (08:54 GMT)