Recruitment Sector Struggles as Tech and Manufacturing Show Resilience in Pre-Market Updates

📈 Today's Key Themes

Pre-market updates reveal a stark contrast between sectors, with the recruitment industry facing significant headwinds while tech and manufacturing demonstrate resilience. PageGroup and Robert Walters reported substantial profit declines, reflecting ongoing economic uncertainty and subdued hiring activity. In contrast, Coats Group posted strong results in the manufacturing sector, and Narf Industries secured a major US government contract in the tech space. Financial services presented a mixed picture, with Funding Circle returning to profitability while Lancashire Holdings faced challenges. This divergence in sector performance suggests a complex economic landscape as we approach market opening.

💡 Company Updates

Annual Results

PageGroup (#PAGE) reported a challenging 2024, with operating profit plummeting 55.9% to £52.4m and basic earnings per share falling 62.7% to 9.1p. Revenue declined 13.5% to £1,738.9m, while gross profit dropped 16.3% to £842.6m. The conversion rate decreased from 11.8% to 6.2%, indicating significant operational pressures. The company cites ongoing economic uncertainty and reduced client and candidate confidence as key factors impacting performance. Read more

Robert Walters (#RWA) faced similar challenges, with operating profit decreasing 80% to £5.2m. The company swung to a loss after tax of £6.0m, compared to a profit of £13.4m in 2023. Net fee income fell 17% to £321.4m, while basic EPS turned negative at -9.1p. The net cash position reduced to £52.5m from £79.9m. Management does not expect improvement in end markets before the latter part of 2025, painting a gloomy near-term outlook. Read more

In contrast, Coats Group (#COA) delivered strong financial results for 2024. Revenue increased 9% on a CER basis to $1,500.9 million, while the adjusted EBIT margin expanded by 130bps to 18.0%, exceeding the 2024 target. Adjusted EPS grew by 18% to 9.5 cents, and the company reported strong adjusted free cash flow of $153 million with 101% cash conversion. Market share gains were noted in both Apparel (to c.26%) and Footwear (to c.29%) segments. Read more

Funding Circle (#FCH) reported a significant turnaround in its 2024 results. Revenue grew 23% to £160.1m, with profit before tax (before exceptional items) of £3.4m, up from a loss of £9.9m in 2023. Term Loan originations increased 33% to £1,407m, while FlexiPay transactions more than doubled to £492m. Despite the positive performance, the company faced negative operating cash flow of £67.4m, which warrants attention. Read more

Lancashire Holdings (#LRE) reported mixed results for 2024. While gross premiums written increased 11.3% to $2,149.6 million and insurance revenue rose 16.1% to $1,765.1 million, profit after tax remained stable at $321.3 million. The return on equity was 23.4%, but the combined ratio (undiscounted) increased to 89.1% from 82.6%. The company maintains a positive outlook for 2025, anticipating mid-teens RoE. Read more

🎯 Leading Developments

Narf Industries (#NARF) has secured a significant US$6.8 million multi-phase contract with the US government's DARPA agency. The three-year contract, with the first phase worth US$2.6 million expected in FY2026, supports the development of Narf's system that simulates multi-step cyberattacks to identify vulnerabilities. This represents a substantial revenue opportunity relative to Narf's £6.79 million market cap and validates the company's advanced threat intelligence and software security solutions. Read more

Northern Bear (#NTBR) released a positive trading update, with EBIT expected to exceed market expectations at £3.15m - £3.45m. The building services group reports a strong order book and has repaid £500k of term debt. While the company is closing its fit-out operation at H Peel & Sons due to pandemic impact on leisure and hospitality, the overall performance and outlook remain very positive. Read more

Intuitive Investments Group (#IIG) announced that its investee Hui10 has signed an agreement to launch a pilot program of its digital lottery solution in China's taxi and ride-hailing industry. The UGO Scratch solution will enable Sports Lottery scratchcard sales and play through UnionPay POS terminals in vehicles, starting in Datong City, Shanxi Province, with planned expansion across the region. This initiative aligns with China's national digital payments and lottery modernisation strategy. Read more

Ilika (#IKA) reported progress in its Goliath development program, successfully prototyping a 50Ah electric vehicle battery. The company has demonstrated manufacturing capabilities in a giga-scale factory setting and made progress in commercial testing and safety data release. Ilika is targeting the initial release of batteries for partner evaluation from the end of 2025. Read more

📅 Week Ahead

7 March 2025: Just Group plc (#JUST) Results for the year ended 31 December 2024
7 March 2025: Stelrad Group PLC (#SRAD) Full Year Preliminary Announcement
7 March 2025: Breedon Group plc (#BREE) Completion of the Lionmark acquisition
7 March 2025: Gusbourne PLC (#GUS) General Meeting to approve cancellation of AIM listing

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