Michael Page - Tough jobs

Tempted to move job? But then struck by the thought that this could be rash, given the economic gloom and doom? Better the employer you know, and all that. Such caution is widespread these days, and telling on Michael Page, the international recruitment consultant specialising in professional jobs. It warned on Monday that, after a weak third quarter, full-year operating profits in 2012 will fall "slightly" short of £68m which investors had anticipated. That estimate was already down by a fifth from 2011's result.

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It could be tempting to see this as a reflection of renewed cost-cutting in the financial services sector. After all, the sharpest year-on-year fall in gross profit during the third quarter - a 17 per cent drop - was felt in Michael Page's large finance and accounting division, according to Monday's management statement. In fact, however, much of this business involves placing bean-counters in industry, so the pain is more widespread. Nor is eurozone weakness solely to blame. True, from a geographical viewpoint, the biggest third quarter gross profit falls occurred in Spain and Italy, down by a fifth from 2011 levels. But Latin America also slumped 13 per cent year-on-year, and the UK, 11 per cent. Even China was "challenging".

Recruitment businesses, of course, are among the most volatile in the business services sector. But it is arguable that the shape of the current slowdown is particularly difficult for the likes of Michael Page; the juddering pace makes it harder to cut into headcount without sacrificing expertise that is needed longer-term. Wisely, Page has kept a solid balance sheet, with £40m of net cash (after the interim dividend payment). But the shares, little changed from year-ago levels, are now trading on 25 times forward multiple, and 21 times consensus forecasts for 2013. In spite of Page's solid reputation, that looks high.

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