Shares in Michael Page International have slipped back despite the recruitment group reporting a 42% rise in half year profits, helped by strong growth in Asia and Latin America.
Profits came in at £61.4m with the company seeing higher permanent recruitment activity as confidence levels improved. This trend continued in July, despite it being the traditionally quieter holiday season. But chief executive Steve Ingham added:
It is the nature of our business that visibility is short and the general level of business confidence and economic activity may be threatened by fiscal consolidtion in the UK and Europe. However we remain quick to react to changing market conditions.
The company's shares have lost 5p to 368p, and James Gilbert at Collins Stewart issued a hold note, saying:
Operating profit of £32.5m was exactly in-line with our interim forecast and about 5% ahead of consensus. However the tax rate of 36.5% was 4.0% higher than we expected so first half earnings per share of 6.6p was in-line with consensus and slightly below our forecast (7.1p). The dividend has been held flat, but we think shareholders can expect a full year rise with the decision to hold it flat more to rebalance the dividend to the historic 30:70 split.
Michael Page is our most preferred stock in the sector. However, we remain cautious given an uncertain macro outlook.
Robert Morton at Investec was more positive:
Today's interim results showed a strong recovery in the first half of the year, with the improvement driven by the permanent operation, and Asia Pacific and Latin America showing particularly strong performances. We are increasing our forecasts on the back of today's results and raising our target price [from 550p to 600p] to reflect the upgrade. We regard Michael Page as a well-managed business with strong recovery prospects and reiterate our buy recommendation.
