Muted reaction to big boys

15-April-2009 | By Colin Cottell

Two of the ‘big boys’, Michael Page and Hays, updated the City during the last period with quarterly announcements. It’s a toss-up as to which announcement contained the grimmest news, with Michael Page’s 38% fall in UK gross profit vying for that dubious honour, against Hays’ 37% reduction in net fee income.

Speaking to journalists after Hays’ interim management statement, Paul Venables, the company’s finance director, said that he was “happy” with analysts’ predictions of fullyear profits in the range of £150-175m.

“There are no surprises with our numbers,” he said. But as he admitted, these days things can change overnight. Hence, his reluctance to make any predictions for profits in 2010. “What I can’t say is whether things will be getting tough in nine months time,” he said. One point of difference between the two companies was the extent to which they are close to the point where cutting staff numbers further would stifle their ability to take advantage of any upturn. While Steve Ingham, Michael Page’s chief executive, indicated that the company was close to that point in its UK and US banking businesses, Venables admitted he wasn’t “that brave” to come to a similar conclusion.

As to any green shoots of recovery, Venables told Recruiter that while banking, and construction & property might be the first areas to improve because “they had come down the most”, he had yet to see any signs of recovery. “I don’t think we have seen stabilisation yet, and until we see stabilisation it’s tough to give any predictions.” The only area showing resilience is IT, he said. The market reaction was muted, with neither company’s share prices showing much movement. That said, Michael Page’s share price was 29p up over the two-week period.