Tuesday, 7 July 2009

UK slowdown slows at Michael Page

(By Anthony Miller – Tuesday 7th July 2009 8:15am). Though not a major player in IT recruitment, we always like to keep an eye on Michael Page, whose trading update chimed with today’s report from the British Chambers of Commerce ( see FT article) that conditions in the UK are getting worse less quickly, which is good news of sorts, I guess.

Following a pretty grim Q1 (see No let up in ‘challenging’ recruitment market), Michael Page’s gross profit, the key financial measure for recruitment firms (also called 'net fee income'), fell 49% at constant currencies (ccy) to £84m in Q2, with UK GP (36% of the group) down 42%. As the downturn in Europe started later than the UK, EMEA region is still in accelerating decline, with GP down 52% ccy. Management expects a “challenging” Q3, being a traditionally quieter season. Nonetheless, with all this grim news, at least Michael page remained profitable in first half, significantly helped by a one-third chop in headcount over the year, which they said was mostly through natural attrition.

By the way, I applaud the way Michael Page treats severance pay as a normal operating expense in the P&L. Absolutely right. Severance costs are no more ‘exceptional’ than recruitment costs – just part of managing the business. Others (which is pretty much the rest of the IT industry) please note!

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