PageGroup PLC on Monday reported a slight rise in first quarter gross profit but noted that a tough market backdrop could see its full-year operating profit in 2023 fall by 29% against the previous year.

The recruitment firm reported gross profit of £262.7 million in the first quarter of 2023, up 1.8% from £258.0 million in the same quarter of 2022. This was down 2.4% at constant currency, however.

Gross profit in the Europe, Middle East, and Africa region - which represents 55% of group gross profit - climbed 12% to £145.4 million from £129.7 million the year prior. The Surrey, England-based firm said this was a record performance for the region.

However, gross profit in the Asia Pacific region dropped 15% year-on-year to £41.2 million from £48.5 million. In the Americas, gross profit fell 0.7% year-on-year, while gross profit in the UK fell 9.4% year-on-year.

PageGroup cited ‘tough market conditions’ for the decline in gross profit.

Chief Executive Nicholas Kirk said: ‘The challenging conditions we saw towards the end of 2022 continued into 2023, with lower levels of both candidate and client confidence resulting in delays in decision making and candidates being more reluctant to accept offers. Reflecting the uncertainty, temporary recruitment outperformed permanent, as clients sought more flexible options.’

Permanent recruitment represented 74% of group gross profit in the quarter, compared to 26% for temporary recruitment. Gross profit in permanent recruitment fell 3.1% year-on-year, however, compared to growth of 20% in temporary recruitment.

Gross profit in permanent recruitment totalled £195.7 million, down from £202.0 million. Gross profit in temporary recruitment totalled £67.0 million, up from £56.0 million.

‘Looking forward, there remains a high level of global macro-economic and political uncertainty in the majority of our markets. However, against this backdrop, we continue to see candidate shortages and good levels of vacancies. Given our highly diversified and adaptable business model, with a cost base that can be adjusted rapidly and a strong balance sheet, we believe we will continue to perform well despite the uncertainty and, at this early stage of the year, expect 2023 operating profit to be in line with company compiled consensus of £140 million,’ the CEO continued.

In 2022, operating profit came in at £196.1 million. If the guidance for 2023 is achieved, this would represent a 29% decline in operating profit from 2022.

Shares in the FTSE 250-listed company were up 0.5% at 456.00 pence on Monday morning in London.

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