Michael Page looks a recovery play

Shares in Michael Page, the recruitment consultancy, tumbled yesterday, despite the company meeting expectations. As January's trading update had indicated, annual pre-tax profits jumped 79 per cent to £40m, but investors appear to have been hoping for a more aggressive outlook statement.

Shares in Michael Page, the recruitment consultancy, tumbled yesterday, despite the company meeting expectations. As January's trading update had indicated, annual pre-tax profits jumped 79 per cent to £40m, but investors appear to have been hoping for a more aggressive outlook statement.

A little unfair, perhaps, as the outlook still looks reasonable. The key drivers of growth are the UK, Asia/Pacific and the Americas, and even Continental Europe has shown some signs of improvement.

The group, which specialises in filling accountancy and financial positions, had been hit by a hiring slump during the three-year global downturn but has since recovered. Terry Benson, its chief executive, has vowed to expand in the US this year, still the smallest division of the company.

Despite spending £24m on share buy-backs during the year, net cash at the end of 2004 was £12m. Mr Benson said yesterday there were further buy-backs to come to reward investors. The company also raised its dividend 18 per cent to 4p, the first rise since the company floated four years ago. But at about 20 times 2005 earnings, it looks rather expensive given that most Continental European economies are far from stable. Expansion in the US will also be a difficult feat. Worth holding, though, to see if Europe can build on its shoots of recovery.