With EU unemployment levels just a shade off their all-time high at 12.1%, and the underlying youth unemployment level approaching 40%, this region has been responsible for suppressing Michael Page’s earnings. The group’s pre-tax profits have dropped by 11.3% to £32 million. However, a strong cash book has enabled the company to keep the dividend payment on hold at 3.25p. We have seen a gradual improvement in many of the global economic regions over the last quarter, and the company is still optimistic that it will be able to meet year-end targets, as it currently envisages an upturn in the second half of the year.
By mid-morning the share price was down 3.5%. However, year-to-date is still up a comfortable 12.5%, with a dividend yield of 2.13%. This sort of return, both in terms of income and on capital, still represents a solid investment. And if tomorrow’s EU GDP figures confirm the end of a recessionary environment in Europe, that will go a long way to helping restore profits to their former glories. Although recruitment firms can do much to trim costs and improve profitability, ultimately they require buoyant economies to drive profits higher.