Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PageGroup PLC (MPGPF, Financial) announced an increase in the interim dividend by 4.5% to 5.36p per share, reflecting confidence in future cash flows.
- The company maintained a strong financial position with net cash of GBP57.2 million at the end of June 2024.
- Page Executive, a division of PageGroup PLC (MPGPF), delivered a record first half with gross profit growth of 6% compared to H1 2023.
- The company made significant progress on its strategic goals, including improving its client net promoter score to 59, up from 56 in 2023.
- PageGroup PLC (MPGPF) continues to invest in innovation and technology, enhancing productivity and customer experience through tools like Customer Connect and Page Insights.
Negative Points
- Gross profit for the first half of 2024 was GBP444.1 million, down 12.4% in constant currencies, indicating challenging trading conditions.
- Operating profit decreased significantly to GBP28.4 million from GBP63.9 million in H1 2023, with a conversion rate drop from 12.1% to 6.4%.
- Earnings per share fell to 5.3p from 13.6p in H1 2023, reflecting reduced profitability.
- The effective tax rate increased to 39.5% from 31.9% in H1 2023, primarily due to prior year adjustments and reduced profits in lower tax jurisdictions.
- The company experienced a softening in activity levels towards the end of the period, particularly in terms of new jobs and interviews, indicating ongoing market challenges.
Q & A Highlights
Q: Have you seen any signs of inflection or change in client candidate behavior in major markets like the UK and France?
A: Nicholas Kirk, CEO: July was broadly in line with expectations, with no extraordinary changes in the UK or France. The technology sector remains challenged, particularly in software development roles affected by AI, but this isn't our primary focus area.
Q: Profitability turned to a loss in the UK and Asia Pacific in H1. Are there profitable areas within these regions, and can they achieve 20% margins long-term?
A: Kelvin Stagg, CFO: Both regions were profitable at a trading profit level, but central costs pushed them into a loss. All businesses, except China, were profitable. There's no structural issue preventing a return to 20% margins.
Q: What cost savings have been achieved on indirect central costs, and how lean is the central cost base now?
A: Kelvin Stagg, CFO: We achieved GBP20 million in run rate savings from restructuring and GBP5 million from closing the UK shared service center. Further savings of GBP3 million are expected from closing the Singapore center. Wage inflation and software costs have offset some savings.
Q: How does the customer net promoter score (NPS) work in a downturn, and does it help maintain relationships?
A: Nicholas Kirk, CEO: NPS is crucial in tough markets as clients rely on our expertise. Our consultants provide valuable guidance, especially when budgets are tight, which enhances client relationships and reflects in improved NPS scores.
Q: Can you provide an update on Page Executive's performance and AI initiatives?
A: Nicholas Kirk, CEO: Page Executive maintained headcount and achieved record H1 performance, indicating strong potential. Our AI initiatives benefit from a robust global data set, allowing us to innovate and deploy quickly, enhancing consultant productivity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
