Analysts have been trimming their forecasts for recruiter Michael Page (MPI) over the last three months and today we see why. The stock slipped 8% to 381p in early trade thanks to a weak performance in its Europe, Middle East and Africa (EMEA) business, and worrying signs of slowing growth in Asia.

'As we look ahead to the final quarter we are becoming more cautious on the short-term outlook in a number of international markets,' says chief executive officer (CEO) Steve Ingham today.

The company is now expecting 'operating profit modestly lower than consensus market expectations.' Consensus was pitched at £82 million operating profit. To put this into context, however, the £1.2 billion business is still expected to deliver close to a 20% year-on-year increase in operating profit but management, investor and analyst expectations clearly have been running ahead of themselves.


Michael Page chart

The announcement builds on earlier warnings about deteriorating performance in Europe. Switzerland-listed Adecco (ADEN:VTX), the world’s second-largest listed recruiter with significant operations in Europe, flagged up softer revenue momentum in August and September.

Michael Page’s net fee income, a key industry metric, increased 11.6% in the nine months to end September on a constant currency basis. EMEA, which represents 37% of its net fee income, grew at 11.2%. Growth was good in Germany (15%) but weaker in France (7%) and Ingham’s outlook statement indicates conditions are deteriorating in the fourth quarter.

Issue Date: 14 Oct 2014