Swallow profits and sell high-flyer Michael Page

Headlam's magic carpet ride; Minorplanet is one to track for now

That cliché about one swallow not making a summer was being repeated a lot yesterday by Terry Benson, the chief executive of the recruitment group Michael Page International. Investors, though, are excitable ornithologists and have a particularly keen interest in taking the UK's economic temperature. And so it was that, after one quarter's strong results, Michael Page's overheated shares soared another 9 per cent in anticipation of a rebound in the UK recruitment market.

So what about this swallow? Trading in May and June was stronger than anticipated, the group said yesterday, which meant that its first-half profit before tax was £11.6m, down 36 per cent on last year but better than the City had been forecasting. The outperformance appears to have been in the sales and marketing sector of Michael Page's UK business.

And the chances of summer? Crucially, it is the UK consumer-focused sectors that were unexpectedly up, not the geographies and sectors most affected by the downturn, not the City, not the professional services such as management consultancy or accountancy which could send Michael Page profits surging. Confidence appears to be hardening across the world, but there have been false dawns before and it will be the autumn before we can be really sure. This time last year, too, Michael Page was being relatively upbeat. This year, employment costs have been jacked up by the UK's national insurance rises, and shareholders still appear more interested in having their companies maximise profits than investing in expansion.

Michael Page's shares were floated at 175p in 2001, just after the peak of the dot.com bubble in the finance industry. The group will not easily make that year's £62m profit again. It has strong positions around the globe and ambitions in the US. Its placement services may again become indispensable since it is true - if unpalatable - that the world does not have enough management consultants to go round. But with shares already back up to 160.5p, on 40-odd times this year's earnings and even 27 times its bubble-time peak earnings, the shares are simply too expensive. Sell.

Headlam's magic carpet ride

Headlam, a distributor of carpets and other floor coverings, posted a strong set of interim results yesterday, matching its house broker's forecasts. The figures were "in lino" with expectations, you might say.

Headlam is the middle man between the carpet manufacturers and the small independent retailers who do plucky battle against the might of Allied Carpets and Carpetright. The continuing strength of UK consumer confidence and the housing market has meant redecorating continues apace and Headlam was able to boast a 10 per cent rise in turnover, to £194.2m, for the six months to 30 June, and a 9 per cent rise in pre-tax profit, to £13.9m.

The improvement in operating profit margins was a particular highlight of the figures, showing that Headlam's 42 businesses have benefited from the expenditure on expanded warehouse facilities which form the backbone of the group. Further warehouse extentions or openings are being planned. The group has a cash cushion of £10.8m to support the ongoing capital expenditure.

There was also better news from Continental Europe where Headlam operates in France, the Netherlands and Switzerland. The economic situation is not so favourable and operating profit slipped by a third, but turnover was still growing and the long-term opportunities remain strong. Distribution to small retailers on the continent is as fragmented as it had been in the UK when Headlam began its acquisition spree a decade ago.

Headlam may find itself floored by a consumer downturn in the short term. But it is a strong performer and, up 9.5p at 317p, the shares yield a 4 per cent dividend. Hold.

Minorplanet is one to track for now

Minorplanet systems has gone from a standing start six years ago to one of the UK's leading telematics companies, whose technology is sold to more than 6,000 customers who use it to track their fleet of company cars, vans and lorries. Useful software already, preventing employees wandering off the job and improving fuel efficiency, among other things. The company is being backed by General Electric, which owns 20 per cent. Longer term, its sytems might allow the electronic road charging that the Government is edging towards supporting.

Right now, sadly, Minorplanet has made a bit of a dog's dinner of its finances. It bought a big stake in a US company as a means of distributing its product overseas, but is now giving most of that stake away in order to staunch the losses. It is handing 42.1 per cent of Minorplanet USA to an unnamed third party, and there will have to be a big write-off in final results later this year. There are also big restructuring charges to come, as the new chief executive, Rob Kelly, slims down the UK and European business. He promises that the company - which still has a nest egg of £4.8m in the bank - will be cash positive next year, but it is not clear yet how he will revitalise sales growth, which has slowed to just 5 per cent according the third quarter figures yesterday.

As the company works through new accounting policies and puzzles over its future direction, there is no hurry to buy, although investors should track its progress. Existing shareholders should hang on for the ride.

News
peoplePaper attempts to defend itself
Voices
voicesWe desperately need men to be feminists too
Life and Style
food + drink
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits