Michael Page fares worst of global recruiters in COVID-devastated June quarter (and Talent smashes it)

Thirteen global recruitment agencies have recently released quarterly updates for trading results to 30 June.

The results tell a strikingly similar tale:

Selected global recruiters: Q2 2020 results

CompanyGlobal resultDecline in regional resultRegion or business unit with largest decline
1.Talent+4%ANZ (+5%)UK (flat)
2.PERSOL-3.6%APAC 1.6%Solution (29.5%)
3.Outsourcing-5.3%NAOther Business (H1 92.3%)
4.Will Group-5.9%Non-Japan 7%Non-Japan (7%)
5. Recruit Holdings-20%Non-Japan 26.6%HR Solutions (32.1%)
6.Kelly-21.7%APAC (+10.8%)Ireland (61.9%)
7.Adecco-30%ANZ 12%France (44%)
8.Randstad-30.7%Rest of World 2% (revenue)France (41%)
9.Manpower-31.9%Asia Pacific Middle East 19%France (47.5%)
10.Robert Half-33.6%NAAccounting & Finance (49.6%) *
11.Robert Walters-34%Asia Pacific 34%Other International (36%)
12.Hays-34%ANZ 28%UK & Ireland (42%)
13.Michael Page-47.6%Asia Pacific 41.6%UK (61.5%)

Note: All results are gross profit changes for the April – June quarter of 2020, compared to the same quarter in 2019, except SThree (Dec 2019 – May 2020, H1) and Outsourcing (Jan – June 2020, H1), all results are in constant currency unless otherwise noted. Robert Half only released data by division, rather than by region. * indicates revenue decline as gross profit results per division were not released. Robert Half Accounting & Finance is permanent placements only. Persol’s APAC results are consolidated with a delay of 3 months. Q2 for PERSOL APAC covers the period from January to March 2020. PERSOL operates a 1 April – 31 March financial year hence they report their results as Q1 results. For comparative purposes, I have labelled them Q2 results. Talent’s financial year is 1 July – 30 June. Recruit Holdings figures are revenue. 

The profit updates that have been released make for sobering reading for most analysts and shareholders.

Without question, the standout business was Talent, the privately-owned Australian IT recruitment business, headed by Executive Chairman Richard Earl and Global CEO, Mark Nielsen.

Talent grew in a market where every other significant global recruitment business went backward in the June quarter; an outstanding result. In a brief chat with Mark Nielsen last week, he attributed the performance to the extensive work undertaken across the last four years to remake the company’s culture. 

Japanese listed companies; PERSOL, Outsourcing, WIll Group and Recruit Holdings each delivered results significantly ahead of their European or US-based global competitors.

Although not all companies reported profit results for the quarter I have listed those that did, below.

  • Manpower reported a Q2 operating loss of USD 64.4 million down from a USD 127.3 profit in Q2 2019.
  • Randstad reported a Q2 operating loss of €69 million down from a €238 million profit in Q2 2019.
  • SThree reported a 49% operating profit decline, from £23.3 million to £13.7 million, for H1 (1 December 2019 – 31 May 2020)
  • Hays released full year (July 2019 – June 2020) operating profit guidance of £130-£135 million, down approximately 46% from £248 million in the 2019 FY
  • Adecco reported a quarterly operating profit decline of 79%, from €241 million to €50 million
  • Kelly reported a quarterly operating profit decline of 68.2%, from USD 34.8 million to USD 11.1 million
  • Outsourcing (owner of Australian brands; Clicks, Bluefin Resources, Jigsaw Talent Management, Red Appointments, Hoban, Luxxe and PM Partners) reported a half-yearly operating profit decline of 40.3%
  • PERSOL reported a quarterly operating profit decline of 9.4%
  • PERSOLKELLY business (the PERSOL brand for their APAC division) showed 23% growth on USD although reported an operating loss for Q2 of JPY 116 million (circa USD 1 million).
  • PERSOL‘s fully-owned subsidiary, PROGRAMMED, recorded a sales increase of 7% on AUD basis.
  • Talent reported a full FY sales lift of 14% to  AUD 726 million and a 13% improvement in operating profit to AUD 13.6 million
  • Recruit Holdings (owner of Australian brands: Chandler Macleod and peoplebank) reported a quarterly operating profit decline of 62.6%
  • Will Group (owner of Australian brands: U&U, Quay Appointments, DFP Recruitment and Ethos Beachchapman) reported a quarterly operating profit decline of 7%.

Context with respect to the Kelly APAC results, as compared to the companies on this list, is seen in Kelly APAC total quarterly gross profit of $6.8 million.

The overall Kelly results were significantly less impacted due to their Global Talent Solutions (GTS) division, which accounts for 25 per cent of their global gross profit, recording a 3.8 per cent increase in their quarterly gross profit.  Kelly GTS encompasses services across; Master Service Provider; Contingent Workforce Outsourcing; Recruitment Process; Outsourcing; Business Process Outsourcing; Advisory; and Talent Fulfillment solutions.

Staffing accounts for 58% of Recruit Holdings’s total business (by revenue) with HR Tech (including Indeed and Glassdoor) and Media Solutions accounting for the remaining 42 per cent. Within Staffing, revenue decreased by 12.3%, year-on-year. Revenue for Japan operations increased by 5.9% but the non-Japan staffing business (Overseas) decreased by 26.6%.

Across the globe, It’s hard to be optimistic that results will get better before they get worse with significant headcount reductions likely to continue for the rest of this year.

I suspect everybody in the global recruitment industry is already looking forward to 2021 with an optimistic air; surely it couldn’t be worse than this?

Updates:

  1. Updated on 24 July 2020 to include Q2 2020 results for Robert Half
  2. Updated on 7 August 2020 to include Q2 results for Adecco and Kelly
  3. Updated on 10 August to include H1 results for Outsourcing
  4. Updated on 13 August to include Q2 results for PERSOL
  5. Updated on 26 August to include FY 2020 and Q2 results for Talent (their Q4) and Q2 results for Recruit Holdings (their Q1 2021)
  6. Updated on 27 August to include Q2 results for Will Group (their Q1 2021) and new commentary

Related blogs

Michael Page results: Two years on from their infamous ski trip 

Michael Page in deep snow: A monumental failure of leadership

The rise and RISE of Talent International: Richard Earl interview (parts 1 & 2)

Hays consultants bill 61% more than local rivals during COVID crisis 

Foreign buyers continue local shopping as USA’s Express buys Frontline

Hays: Still a force but Japanese invaders pose new threat

The recruitment industry: Where to now?

 

8 Comments

  1. Greg W on 23/07/2020 at 6:36 pm

    The CEO of Page takes home GBP 4m. Which isn’t far off the salary of Matt Comyn from CBA and quite far ahead of his counterparts at Hays etc. Despite the Covid quarter its difficult to see how that wage is justified especially looking at the share price and dividends paid out over last few years.

  2. Anon on 23/07/2020 at 9:45 pm

    It’s actually great in the States. We’ve come off a record quarter. It’s unsurprising that the uninspiring global agencies are failing.

    • James on 24/07/2020 at 9:49 am

      Hi ‘Anon’, what does ‘great in the States’ mean?
      Our news must be wrong here because it certainly doesn’t look great in the States from where I’ve been watching.
      Unless by ‘coming off a record quarter’ you mean the Jan-Mar quarter (which was pretty good for many) it’d be hard to believe the whole of ‘the States’ had a bumper Apr-Jun quarter which was the quarter being discussed in the blog.

      • Anon on 13/08/2020 at 3:54 am

        I was referring to April – Jun, “James”. It was a great quarter for many of the boutiques.

        You must be talking to your global agency friends. I’ve seen their numbers, I agree, they’re not great.

  3. Jack on 28/07/2020 at 5:40 am

    States is booming in certain parts. You need to remember James that America is huge not like the UK. Each state is basically like a single Britain. Very different markets in each and political views! For example San Francisco is doing great against the Covid but NYC is not etc. West coast / Boston seems to be flourishing.

  4. BMS on 07/08/2020 at 9:29 pm

    Also worth mentioning that Page shut down their office in NZ as a result of COVID losses.

  5. John on 27/08/2020 at 3:29 pm

    A positive adjustment to the above stats would be Talent’s operating profit was actually $16m AUD and not the $13.6 million as mentioned here. Good news for them….

    • Ross Clennett on 27/08/2020 at 4:15 pm

      Talent reported “global EBITDA grew 13% year-on-year.” For the FY 2019 Talent reported global EBITDA of $12 million, hence 13% growth is $13.6 million EBITDA for 2020.

      Talent also reported “Asia Pacific up 23% to $16m (for FY 2020)” which can only mean that the US and UK & European divisions recorded a combined operating loss of AUD 2.4 million (unless there has been restatement of 2019 EBITDA).

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