Pagegroup (LSE:PAGE) Q3 2026 Earnings Call

0:00 Good morning, everyone, and welcome to the Michael Page 2026 Third Quarter Trading Update. I'm Kelvin Stagg, Chief Financial Officer, and on the call with me is Nick Kirk, Chief Executive Officer. While I will not read it through, I'd just like to make reference to the legal formalities that are covered in the cautionary statement in the appendix to this presentation, and which will also be available on our website following the call. The group delivered gross profit of £190.5 million in the quarter, representing growth of 1.5% in constant currencies and 1.4% in reported rates against 2025, the first quarter of growth since Q4 2022. Productivity, measured as gross profit per fee earner, grew 6% versus Q3 2025. This is higher Q3 productivity than in our record year of 2022.

0:56 Overall, around 50% of the group was in growth in Q3. Our fee earner headcount reduced by 63, or 1.3% during the quarter, with a reduced level of new starters over the summer period. Overall, the group ended the quarter with 4,851 fee earners and a total headcount of 6,604. Net cash at the end of September was around £6 million, in line with expectations. This compares the net debt of £7 million at the end of Q2 and is before the recent interim dividend payment of £4.6 million paid on the 9th of October. I will now give a brief financial review. Our Fiona headcount reduced by 63 or 1.3% during Q3, a reduced level of starters over the summer period.

1:50 Reductions in EMEA and APAC were partially offset by additions in the Americas and the UK. and our non-operations headcount decreased by 12 in the quarter. We remain committed to our strategy and continue to reallocate resources into the areas of the business where we see the most significant long-term structural growth opportunities. Concurrently, we continue to ensure headcount in all our markets is aligned to activity levels. Over the past two years, we have reduced by 24% in France, Germany, and the UK collectively, partially offset by increases in the US, Japan, and India of 18%. Growth profit per fee earner and measure of productivity remained high and increased 6% compared to Q3 2025.

2:39 This is higher Q3 productivity than in our record year of 2022. In line with our strategy, we continue to move resources and many more. I will now present a regional review. Group gross profit grew 1.5% in constant currencies against Q3 2025.

3:24 The group delivered its first quarter of growth since Q4 2022. We saw growth continue in Asia Pacific, the Americas and Southern Europe with trading more challenging albeit stable across France, Northern Europe and the UK. In total, around 50% of the group was in growth in Q3. In line with our strategy, Page Executive, which now represents around 10% of the group, delivered its second consecutive quarter of growth of 15%. In our largest region, Europe, Middle East and Africa, which represented 49% of the group, we declined 3.8% with continued mixed results across the region. Germany, the group's largest market in Q3, representing 12% of the group, declined by 7%.

4:15 We saw strong results from our contracting business, up 15%, with continued strong demand for finance transformation and project-based IT implementation specialists. Page Executive grew 9%. However, trading was more challenging in our predominantly permanent-focused Michael Page business. France, 11% of the group, declined 11%. Temporary recruitment, down 8%. outperformed permanent, down 15, indicative of the ongoing tough market conditions. The trading environment remains challenging, with high levels of uncertainty amongst both candidates and clients. As in recent quarters, clients are highly selective, slower in decision making and cautious on salary offers. As a result, the recruitment process has become more complex and time to hire has increased.

5:09 Southern Europe delivered another quarter of growth, up 5%, with Spain continuing to deliver the standout results, up 9%. Elsewhere in Europe, we saw challenging market conditions in all countries, albeit Switzerland returned to growth with improved conversion of office to placements. In response to these conditions, we reduced our Fiona headcount by 47, mainly in Northern Europe. In the Americas, which represented 22% of the group, We grew 8.9% against Q3 2025. North America grew 8%, with the US, our second largest market in Q3, up seven, delivering two years of consecutive quarterly growth. Our largest discipline, construction, continued to deliver the standout results, up 12%, due to continued strong client demand and talent shortages.

6:04 In addition, manufacturing delivered another quarter of growth. However, we are yet to see a broad-based recovery, with tough conditions in most other disciplines. In Latin America, gross profit grew 10%, in line with Q2. Mexico, our largest country in the region, grew 8, slightly ahead of Q2. Brazil grew 5%, a notable improvement on the decline of 6 in Q2. Temporary recruitment continued to outperform permanent, due to the uncertainty in the lead-up to the election. Columbia, which represents around 20% of Latin America, grew 14% due primarily to our technology-focused consulting business. Our remaining countries in Latin America grew 18% collectively.

6:51 Overall, Fiona headcount increased by 16 in the quarter, mainly in the US. In Asia Pacific, which represented 18% of the group, Q3 gross profit grew 14.7%. Asia was up 19%, a further improvement from the growth of 11 in Q2. This is our sixth consecutive quarter of growth, with 10 of our 11 markets delivering growth. Greater China was up 28% in Q3, an improvement on the growth of 17 in Q2. Mainland China grew 36%, due partly to a soft comparator, but also driven by improved trading across both Michael Page and Page Executives. We continue to see improvement in sentiment from both clients and candidates, which is helping to secure placements, particularly for senior hires across both domestic and multinational clients.

7:47 Hong Kong was up 9% compared to the growth of two in Q2, with a particularly strong result in Page Executive. Southeast Asia grew 8% in Q3 25, with stable market conditions across most of the region. In Japan, where we've invested over the past two years in Fionas due to the size of the market and its strategic importance, we delivered a standout performance up 23%, a record quarter and a further improvement on the growth of 18 in Q2. India grew 18%, delivering another record quarter. The market sentiment remained positive with continued good levels of business confidence. Australia declined seven. with a slight deterioration in market conditions due to economic uncertainty.

8:37 Our Fiona headcount in the region decreased by 41 in the quarter due to the timing of levers. In the UK, which represented 11% of the group, gross profit declined 5.5% in line with Q2. Market remains tough but stable with some positive sentiment, albeit this has not yet translated into job acquisition. Temporary recruitment, up 2%, continue to outperform permanent, down 9%. Fiona headcount increased by 9% in Q3. I will now provide a summary of our results. The group delivered our first quarter of growth since Q4 2022. We saw continued growth in Asia Pacific, the Americas and Southern Europe, with trading continuing to be more challenging, albeit stable, across France, Northern Europe, and the UK.

9:33 We continue to execute our strategy, harnessing the power of PAGE and our position as the global leader for specialist management and leadership permanent recruitment, placing more senior talent at higher salary levels and at higher fee rates. As a result, Q3 productivity was up 6% on 2025 and was also higher than Q3 2022, our record year. Page Executive, representing around 10% of the group, delivered its second consecutive quarter of 15% growth. The progress we are making in productivity, technological innovation, operational efficiency and strategic execution demonstrates that our strategy continues to work and positions us well for future growth. Collectively, since the launch of our strategy, our cost saving programmes have delivered annualised savings of around £40 million.

10:26 This cost-based control has continued in 2026, incurring 2.5 million of one-off costs in relation to senior exits in H1, with a similar figure expected for H2. As we continue to see improvement and normalisation in trading in a number of our markets, there remains a significant degree of uncertainty. We have a highly diversified and adaptable business model, a strong balance sheet and a cost base that is under continuous review. We currently expect 2026 operating profit to be in line with company compiled consensus of around £29 million. Nick and I will now be happy to take any questions you may have. Thank you. With that, we can start today's Q&A session.

11:14 If you would like to ask a question, please press star followed by one on your telephone keypad now. And to withdraw your question, please star followed by two. Our first question today comes from Carl Green from RBC. Your line's now open. Please go ahead with your question.

11:32 Thank you very much. Good morning. I've got three questions unrelated. Firstly, just on that 6% increase in productivity, could you just decompose that in terms of what the bigger building blocks were in terms of salary increases, mix, headcount management, etc. That's the first question. The second question, just thinking about page executives and the very strong momentum there going into fiscal 27, how much of a Conversion Ratio, Tailwind, do you think that page executive could be as we look forward into the next year? And then the last question, just specifically on Australia, just maybe a little bit more colour if you can in terms of some of the specialisms which have dipped in the last few months, just to get a sense as to whether that's going to be temporary or maybe something a little bit more structural coming through in Oz. Thank you.

12:16 Thanks, Carl. I think I got most of that, but I think you might need a new headset. I know one blew up last night, but so you might need another one by the sound of it. but anyway I'll have a go answering the questions if I miss any detail please please come back to me and just ask me a follow-up question so in terms of the increase in productivity as you know we closed our Page Personnel business and we're moving resource up into the Michael Page business which is a well-established management and specialist recruitment firm with a brand known for that so we're really just building out the presence of Michael Page now naturally that's therefore driving productivity Thank you very much. And dilute that productivity. We have to hold the productivity and grow out at this new high productivity level to drive margins going forward.

13:25 A key part of that story is Page Executive and we're delighted to have three quarters of growth, two at 15%. And the business itself is really delivering in the way that we thought it would when we made it a central pillar of our strategy. it's a business that naturally as well feeds the Michael Page organisation because obviously by placing a CFO into a company you then have the opportunity for that CFO to come back to us if they're looking to do a reorg and Michael Page then get work off the back of that so that works very well for us it also is a career opportunity for some of our Michael Page consultants that want to move up into more senior search work and the Page Exec commitment that we have, 350 fee earners globally now, allows us to actually give them that career opportunity within the Page family. So that's all good. And I think your final question was on Australia.

14:20 I mean, what we're seeing there is that it just feels as if the sentiments come off a bit. It felt a bit better in Q2, feels a bit weaker in Q3. By region, certainly the Sydney office, Melbourne office has been tougher. The Perth office and the Brisbane office were better. Great, thanks Nick Was that okay Carl? Yep, got all of that Okay, good, okay, thanks As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad now. And to withdraw your question, it's star followed by two.

15:09 Our next question comes from Abby Bell from UBS. Your line is now open.

15:13 Please proceed. Morning, both. Thank you for your time. Just two questions for me. Firstly, as your trading is improving, are you beginning to see any recovery at the top of the funnel in terms of new jobs and interviews, or is the improvement Does the improvement remain primarily driven by better conversion of existing activity? And secondly, but also quite similar, how have you seen client activity changing in the markets which are backing growth? Is it that payoffs are increasing, decisions are faster, or just that you're exposed to the stronger verticals with demand at the moment? Thank you.

15:49 Thanks, Abby. Okay, I'm happy to take those two. So the way I think about it, having kind of seen A lot of recoveries in the past and seeing now our US business recovering for two years. I think the US business kind of has gone through almost three cycles. And I think the other businesses are at a certain stage of that cycle. So the first stage you look for is management tend to feed back to you and say, it just feels a bit better. It's quite hard to actually put your finger on exactly why, but Thank you very much. and then the third and final stage of recovery then is a top line improvement in activity levels so that top of the funnel you were talking about.

17:01 I think you could pretty much place all of our businesses at one of those three stages and probably not surprisingly if you look at the US specifically at the construction business we have there it will be in stage three so it'll have gone through the sentiment stage a couple of years ago it'll then have moved through a stage where it still feels quite fragile but the Thank you very much. Thank you very much.

18:14 Now, that's the most advanced. Other businesses that we will have, maybe like a UK or a Germany, might still be sat in the sentiment stage. But if that sentiment holds, then what you'd expect over the next three, six months is the shift into stage two, where we start to see more of those offers turning into fees. That then comes through in our numbers. And then over time, a return to improved activity levels. So, yeah, I mean... I guess the other part of your question really is how have we seen clients' attitudes changing? I mean, in the markets where things are improving, clients just feel more confident about getting the deal done. They feel more confident about giving us the work and moving forward on projects and programs. And so it just feeds from that initial word really, which is sentiment. As people start to feel better, it starts to lead to action and then action ultimately starts to feed into our results.

19:10 and we're now seeing that in 50% of our markets and the markets where we're not seeing it in the vast majority they would be in the positive sentiment stage now. So you're now waiting for them to move out of that sentiment stage into something that then feeds our results over the next three, six months or however long it takes.

19:32 That's super clear, thank you. If I could squeeze one more in, just that September has historically been one of the largest hiring months of the year. Following the sort of typically quiet some months, can you provide any sort of commentary into the trading in September or any exit rate commentary? And anything would be helpful because I know it's quite a big hiring month of the year.

19:55 All I will say really, Abi, is that it was in line with our expectations. There isn't any particular narrative we can give month by month, We report the quarter as a whole, but September was in line with what we thought it would be.

20:09 That's great. Thank you so much. Thank you. With that, we have no further questions in the queue at this time, so I will hand back over to Kelvin for any closing comments.

20:23 Thank you, Drew. As there are no further questions, thank you all for joining us this morning. Our next update to the market will be our fourth quarter trading update on the 13th of January Thank you all for listening