Investors turned their backs on FTSE 250 recruitment firm Page Group after it warned that the battering of the UK hiring market by Brexit and unstable politics was set to continue.
The firm saw UK profits drop 4.5 per cent year-on-year in the second quarter to £36.6million and 2.3 per cent over the first half of 2017 to £73million.
In particular, it struggled in the financial services market, where hires fell 15 per cent during the second quarter. Hires in the technology market were much healthier, rising 21 per cent.
Despite investors being put off by the gloomy domestic outlook, which sent Page Group’s shares down 2.3 per cent, or 11.4p, to 477.8p, brokers were more positive, citing its wider outperformance.
Troubled: Page Group saw UK profits drop 4.5 per cent year-on-year in the second quarter to £36.6m and 2.3 per cent over the first half of 2017 to £73m
Globally, the firm saw profits rise 16 per cent to a record £182million over the second quarter, driven by a strong performance in the US – where profits jumped 27 per cent – and Europe, where they grew 24 per cent.
Overall, the results beat analysts’ expectations, with Liberum even suggesting that Page Group is in a strong position to announce a special dividend in August.
The FTSE 100 was in the red yesterday, with sterling slipping in afternoon trading after a speech by Bank of England deputy governor Ben Broadbent which provided little clarity on interest rates. The index fell 0.55 per cent, or 40.27 points, to 7329.76.
FTSE 250-listed building products firm Grafton Group won over investors with a positive first half update which told of strong sales in Ireland, where revenues grew 22 per cent, and the Netherlands, where they grew 52.5 per cent.
Grafton said it outperformed Ireland’s recovering building market and was boosted by strong growth in the Dutch economy and higher levels of housebuilding and sales in the country.
This helped the group’s total revenues grow by 9 per cent over the period, despite more muted performance in the UK where sales rose by just 4 per cent.
Grafton’s chief executive Gavin Slark said that while he was optimistic on the UK in the medium term, he is worried that the area will continue to be hit by wage pressure and political uncertainty over the short term.
Broker Davy said: ‘Grafton remains our top pick in the sub-sector, with current levels still an attractive entry point in our view.’
Shares in the firm rose 1.5 per cent, or 10.5p, to 719p.
In small-cap land, investors in Low & Bonar, which designs and manufactures components, were given plenty to chew over yesterday, and, unfortunately for the company, they did not seem to like it.
It announced the sale of one of its loss-making textiles business to a Swedish industrial group called Duroc for £6.1million as part of ongoing efforts to improve efficiency. It said while the business was a market leader, it requires investment to sustain profit growth.
Despite revenues increasing by 16.4 per cent to £210.3million, investors were put off by a £9.5million year-on-year increase in debt to £149million.
Peel Hunt maintained its 110p target price and ‘buy’ recommendation but shares fell 5.9 per cent, or 5p, to 80p, a three-month low.
In the junior market, clean energy firm ITM Power crept up 0.6 per cent or 0.12p to 20.88p after announcing a fuel supply contract with Honda,, which has similar deals with the Toyota and Hyundai.
Israeli suit-maker Bagir Group didn’t look smart after shares tanked 31.4 per cent, or 1.38p, to 3p on the back of a profit warning.
As well as dealing with an ongoing restructuring, facilities in Vietnam and Ethiopia failed to support larger order numbers, which is expected to push down first half revenues by around £4.1million.