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.
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