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World – Hays achieves net fee growth in all regions

08 October 2015

International recruitment firm Hays (HAS: LSE) today reported net fee income growth of 8% on a like-for-like (LFL) basis for the first quarter ending 30 September 2015, compared with the same period last year. 

Region Change Change LFL
Asia Pacific -7% +6%
Continental Europe & RoW +8% +11%
UK & Ireland +6% +6%
Total Net Fee Income +3% +8%

Hays’ temporary and permanent business segments reported similar growth during the period, on both a reported and like-for like basis. The temporary business accounted for 58% of net fees during the quarter.

Segment Change Change LFL
Temporary +3% +8%
Permanent +3% +8%

Alistair Cox, Chief Executive of Hays, commented: “We have had a good start to the new financial year, with all three of our key businesses delivering further growth. In Germany, growth accelerated as we capitalised on our recent headcount investments there. The recovery in our Australia business continued, though conditions remained mixed, with strong growth in New South Wales and Victoria contrasted by tough conditions in the mining-focused regions.”

“Despite tougher comparators, UK growth was solid and broad-based, especially in the private sector. Elsewhere around the world we delivered another quarter of strong, consistent growth, as 17 countries grew by 10% or more (LFL) and eight delivered all-time record quarterly performances.”

“Looking ahead, while we continue to see generally consistent conditions overall, the year-on-year comparators become more challenging, notably in the UK and Australia, and we are mindful of current macro-economic risks.”

“Given this backdrop, we remain focused on driving profitable growth in our business. This will involve further targeted investment where we see clear opportunities for growth, and continually working to improve consultant productivity globally in order to deliver our long-term profit and cash objectives,” Mr Cox concluded.

Asia Pacific represented 22% of group net fees and delivered growth of 6% on a like-for-like basis. In Australia and New Zealand the company delivered growth of 5% (LFL), driven by strong permanent staffing growth of 13% (LFL). The temporary staffing segment, which accounted for 64% of net fees in the quarter, increase by 1%.

In Asia, which accounted for 24% of the region’s net fees, Hays achieved growth of 11% (LFL) compared with last year. In Japan, the company’s largest business in Asia, net fees rose by 8% (LFL). In China the company delivered net fee growth of 19%, a record quarter for the business.

Continental Europe and Rest of World, Hays’ largest region representing 42% of group net fees, achieved growth of 11% (LFL) compared with last year. Net fee growth accelerated to 10% (LFL) in Germany; with temporary net fees up by 8% and permanent fees rising strongly by 22% (LFL).

In the rest of the division net fees grew by 14% (LFL). Within this segment 13 countries delivered growth of 10% (LFL) of more, including key businesses such as Belgium, the Netherlands, Poland, Switzerland, and Russia. The latter of which grew by 37% (LFL despite ongoing uncertainties in that market.

France, Hays’ second largest business in the division delivered another good performance, growing net fees by 12% (LFL). The company’s businesses in southern Europe continued their strong recovery with Italy growing net fees by 12%, Portugal by 22%, and Spain by 47%, all on a like-for-like basis compared with last year.

Net fees in Brazil were down by 29% (LFL) as conditions remained tough. The rest of Latin America delivered further good growth. In the US, the integration of Veredus into the Group has been completed and the business is performing in line with expectations. In Canada, net fees were down by 8% (LFL), primarily as a result of challenging conditions in natural resources-related specialisms.

In its home market, the UK & Ireland, Hays achieved growth of 6% (LFL), slower than the 9% growth in the preceding quarter. Reuters reported that Group Finance Director, Paul Venables, shrugged off concerns over the UK business: "The only area that we've seen a bit of a slowdown is in public sector, which I think is to be expected a few months after the election as a number of authorities begin to focus on spending rounds."

UK Temporary staffing fees rose by 5% (LFL), while permanent fees were up 7% (LFL). Growth remained broad-based as six regions grew by 5% or more. Strong performances were reported in the North West and London (excluding the City) both of which grew by more than 10%. The City of London grew by 3%.

Ireland delivered an excellent performance with net fees up by 31% (LFL) compared with a year ago.

Growth continued in Hays’ technical specialisms with both Construction & Property and IT growing by 11% (LFL). Accountancy & Finance was flat and Education, a predominately public sector business, delivered growth of 12% (LFL).

The company’s private sector business, which represented 72% of the region’s net fees, delivered consistent growth of 6% (LFL). The public sector business achieved fee growth of 5% (LFL), however activity levels in this business slowed as the quarter progressed. Excluding Education Hays’ public sector business, the public sector business grew by 3% (LFL) in the quarter.

In trading today, the company’s share price decreased by 5.5% to £1.39, a 10-month low but an increase of 20.6% compared with a year ago. Based on its current share price, Hays has a market value of £2 billion.