Bellwether stocks Hays and Michael Page International announced interim management statements earlier this month following recent robust announcements from mid-cap peers Robert Walters and Matchtech Group that underpinned their steady rises in their share price during September.

Over the quarter ending 30 September, Hays’ net fee income (NFI) fell by 1% year-on-year, with the UK and Asia Pacific posting falls of 8% and 9% respectively. Europe was a different story for Hays with NFI increasing by 16%, driven largely by stellar growth of 25% in Germany.

In clear contrast, Michael Page’s NFI for the same period fell by 8% year-on-year, with Asia performing relatively resiliently, down just 1%. But in Europe they suffered, NFI falling there by 15%. The quarterly and year-to-date performance led Michael Page to warn that full year operating profits are expected to be ‘slightly below’ analyst expectations.

Hays’ share price trended up by 6% on the release of its statement, the market encouraged by the 1% fall in NFI being lower than the expected 4% decrease. Michael Page’s share price (which has been on the slide since a mid-March high of nearly 500p) remained flat on the day at 365p, suggesting the underperformance had already been priced in. 

Michael Page continues to trade at a premium price earnings ratio to Hays (24x vs 14x respectively), probably reflecting that as a permanent focused recruiter with a truly global footprint, the market considers Michael Page to be better positioned to outperform into an eventual economic recovery. However, in the short term, Hays’ lower risk of contract weighted NFI seems more attractive to investors as reflected in its more resilient recent share price.

Elsewhere in the trading statements, we noted Hays chief executive Alistair Cox’s description of ‘multi-speed conditions’ across countries and territories making up the global recruitment industry. In the multi-speed world, some countries are unpredictably outperforming, while others that have in recent years been a reliable source of growth have begun to stall. Three years ago, who would have predicted that in 2012 recruiters in Eurozone markets like Germany would be out-performing the likes of Hong Kong, Singapore and Japan?

It is likely that the new multi-speed world will focus corporate decision-makers on looking beyond the unpredictable short term, and more on the long-term in their geographic expansions, organic or through mergers & acquisitions. In doing so, we expect strategic thinking in the sector to gain more discipline, and with it to be able to better increase shareholder value.