The Week Ahead: Recruitment keeps watch on Michael Page

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The Independent Online

With unemployment still rising, today's results from the staffing group Michael Page International are likely to be scrutinised for any clues about the outlook for the sector.

Analysts are cautious about the road ahead, with Numis saying that, given the recent strength in the company's shares, "evidence of a demand-led recovery is needed to provide the next leg of the re-rating process, and this remains some way off". Indeed, recent results from Adecco, the Swiss recruitment group which last year tried to buy Michael Page, did little to inspire optimism, according to Panmure Gordon, with the broker highlighting the fact that "pressure on rates remains intense, with no real green shoots of recovery coming through at this stage of the cycle".

"We would expect the same guidance from Michael Page ... and do not it expect to call the bottom of the market just yet," Panmure said. It added that, as far as the full year outcome was concerned, given that July and August tended to be quiet, a proper picture is unlikely to emerge until trends for September are available.

"Guidance on head count will also be key, with the company continuing to cut head count by 10 per cent, sequentially through the second quarter," the broker explained. "This suggests the company is still not comfortable with the size of the business relative to current placement demand, although Michael Page has traditionally been less aggressive on this front compared to some of its peers, in order for it to be well positioned ahead of an upturn."



TODAY: Results/updates: Hill & Smith Holdings, Michael Page International.



TOMORROW: Arbuthnot expects news of strong trading when Mears, the social housing repairs and maintenance provider, posts interim results, with its social housing and domiciliary care divisions likely to be boosted by recent contract wins. Moreover, the management is expected to reiterate that the pipeline remains strong, with further contract wins expected in the months ahead. "Mears remains well placed in the current environment," Arbuthnot said. "The group has a strong balance sheet and operates in robust end-markets, providing recurrent services that are near non-discretionary in nature."

Results/updates: Rok, London Capital, Tribal, Mears and British Land.



WEDNESDAY: Intec Telecom, John Menzies, Hochschild Mining, Xaar, Eurasian Natural Resources Corporation.



THURSDAY: The oil services group Wellstream Holdings is expected by UBS to post £34m in earnings before interest and tax, on £200m of revenues, in its half-year results. Earnings per share are expected to be down 22 per cent year-on-year, mainly because its profit margins have fallen.

"Our major area of concern is the Newcastle facility, which seems to be struggling to maintain capacity utilisation," the broker said. "We believe the company has the advantage that its largest customer, Petrobras, is still pressing ahead with its capital expenditure plans and we expect a decent order intake in the second half for the Niteroi plant. "The outlook for the Newcastle plant is more dependent on the oil price outcome for the second half, given its exposure to the North Sea and other international customers with more oil price sensitivity than Petrobras."

Also on Thursday, Numis does not expect a further reduction in its full-year estimates for SIG, when the building materials group posts its interim results. As for the shares, the broker maintains a "reduce" stance, saying: "The recent stake taken by IKO Enterprises has generated a lot of interest in the shares, to the point where they are fundamentally expensive relative to the sector."



Results/updates: Rio Tinto, Vantis, TT Electronics, SIG, Wellstream Holdings.



FRIDAY: The property website Rightmove is due to reveal its half-year numbers. UBS expects to hear of £16.6m in pre-tax profits, with earnings of 10.8p per share. "Although we forecast a revenue decline of 12 per cent, that reflects agents that left Rightmove in the second half of 2008," the broker said.

"We expect the company to report fairly stable agent numbers for the first half [of this year] as the housing market backdrop has improved. The company could make positive noises on the potential for price increases next year."



Results/updates: T Clarke, Rightmove.

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