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By Lee Wild

Date: Tuesday 07 Oct 2008

LONDON (ShareCast) - The reluctance of British firms to hire in the face of an ever-worsening economic crisis sent third quarter UK gross profit down 8.3% at recruiter Michael Page.

Group gross profit rose 14.6% to £141.4m, but the country’s second largest recruitment company said profit at its UK business, which accounts for almost a third of profits, fell to at £44.9m. It rose 3.9% during the first half.

Last month, the company rejected a 400p per share bid from Swiss human resources giant Adecco. Page boss Steve Ingham said that fell short of his valuation of 600p.

“Overseas, where the group generates 68% of its gross profit, the rates of growth are still strong but are slowing, especially in North America,” said Killik Capital analyst Jonathan Jackson.

Page said profit rose by 19% in Asia-Pacific and 35% in the Americas, but Jackson remains worried about the “high level of operational gearing inherent in the business model”.

The company warned it will axe more staff during the final quarter of the year if market conditions continue to deteriorate.

“Market conditions through the third quarter became increasingly challenging,” admitted Ingham. ”The unprecedented turmoil in the financial sector during September has eroded confidence in the wider economy.”

“This has reduced activity levels and increased the cautionary candidate and client behaviour we started to encounter in the first half of 2008, further reducing our visibility. As anticipated, our businesses have reacted quickly by reducing headcount through natural attrition where activity levels are slowing, such as the UK and North America.”

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