Michael Page – 12 months is a long time in recruitment

(By Anthony Miller – Monday 17th August 2009 8:30am). It’s all in the nuance, isn’t it. How would you interpret this statement, from recruiter Michael Page’s half-year report: “... the Group has adequate resources to continue in operational existence for the foreseeable future being a period of at least 12 months”? An impressive validation of management’s strategy that despite myopic revenue visibility, the business is solid for another year? Or, ‘please make your way to the lifeboats in an orderly fashion’? Doubtless others will ask this question at the briefing this morning, but so far the stock is only down 3% as I write.

The numbers and trends were previewed last month (see UK slowdown slows at Michael Page) and they were, of course, dreadful. Yet, unlike Spring last week (see Spring is sprung!), Michael Page (just) managed to remain profitable, even without a welcome VAT + interest refund from HMRC. In fact, Michael Page has lodged another refund claim over 3x bigger though has not proffered a view as to how much of it (if any) and when (if ever) they will see it.

If we are looking for any lights at the end of this long, dark tunnel, it may be in their EMEA (ex-UK) region. This is their largest (48% of GP) but fell into operating loss. Although management made no mention of the seeming ‘recovery’ in France and Germany last week (see Break out the champagne and sauerkraut!), perhaps, just perhaps, this may presage a slowdown in the decline, much as they are seeing in the UK.

But the question many will be asking is whether management was right to reject Swiss-based Adecco’s overtures a year ago (see Adecco walks away from Michael Page). Although its stock has recovered from the 251p low after the news came out, today’s 312p is still a ways away from the 400p that was apparently on the table. So Adecco bought Spring instead. Not the same animal at all, so I guess this would not preclude Adecco looking again at Michael Page if it weakens further.