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UK – Contract recruitment drives profits at Harvey Nash

30 November 2012

UK recruiter Harvey Nash (HVN:LSE) today reported that trading in the four months to November exceeded market expectations, mainly driven by improved results in the UK, Ireland and Asia, as well as stronger demand in temporary recruitment seen in Northern Europe.

Overall, the firm remained cautious. “Looking forward, the final quarter will continue to be challenging for permanent recruitment, particularly in Europe, and it is premature to comment on the following year,” the company said in an interim management statement published on Friday.

Third-quarter revenue for the period ended 31st October increased by +10% year-on-year. Gross profit in the period was up +5% and profit before tax rose +3%.

But uncertain market conditions in Europe resulted in a -5% decline in gross profit in the region. The European slowdown particularly impacted senior executive recruitment and the firm’s outsourcing business. However, demand for contract staff remained high in countries including Germany, Belgium, Luxembourg and the Netherlands. 

In the UK and Ireland, gross profit was up +10% when compared to a year ago due to higher revenues from managed services and offshoring. Demand for permanent workers remained subdued in the period. Outsourcing activities increased sharply and contractor numbers rose by +19%.

“The economic uncertainty throughout the world has meant that clients have tended to favour flexible contract and temporary hiring above permanent recruitment. In addition, much of the increased demand is for specialist software engineers to design and deliver mobile and web-based commercial applications,” said Albert Ellis, chief executive of Harvey Nash.

Harvey Nash is the 40thlargest staffing firm in the world, according to research by Staffing Industry Analysts.

In early trading, the company’s share price rose +3.6% to 58.00 pence, +24.7% above the 52-week low of 46.50 pence seen in July this year. The firm has a market value of £41.13 million. 

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