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UK — Harvey Nash maintains turnover but profits are down

30 September 2009

Harvey Nash Group plc (HVNZ:PLU), the recruitment and outsourcing consultancy announces its interim results for the six months ended 31 July 2009.

Revenues were in line with the same period in 2008 at 200 million Pounds. Gross profits were down by 4.9% from 33.3 million Pounds in 2008 to 31.7 million Pounds in the same period of 2009.


Operating profits were down by 53% from 4.3 million Pounds in 2008 to 2 million Pounds in 2009. The interim dividend was up from 0.80 Pence in 2008 to 0.85 Pence in 2009.

IT outsourcing was 8% of revenues in 2008 compared to 21% in 2009 while permanent placement was 42% of revenues in 2008 and only 30% in 2009. This shift has enabled the company to maintain sales levels at the expense of profitability.

Revenue in the UK and Ireland declined by 8% while operating profit declined by 41%. In the UK, new business wins in the public sector combined with increased productivity, lifted contribution ahead of the previous year.
Revenue in mainland Europe increased by 1% but operating profit decreased by 40%. Harvey Nash has found that demand for specialist professional recruitment has been weak across Europe and the impact of the financial crisis appears to have lagged the UK and the US by around six months.
 
On the other hand, HR outsourcing and contracting services have remained relatively robust. The cost base in Europe has been reduced through a number of measures including a flexible approach to pay and bonuses and some limited consolidation of office accommodation.

France and Poland were loss making during the period. In Switzerland, margin reduction and consolidation of the supply chain continues to drive relationships in the Financial Services sector and demand in Geneva has been stable with good results. HR outsourcing and contract services in the Benelux has partially mitigated weak recruitment results while, in Germany, the strategic outsourcing contract has delivered increased revenues, insulating the German business overall from weak demand in the manufacturing sector which has implemented a recruitment freeze and has dramatically reduced working hours.

Harvey Nash's CEO, Albert Ellis said, "the majority of our businesses across the Group have performed exceptionally well in very challenging markets and we are pleased to have maintained our revenues in line with the previous year, demonstrating tangible gains in all of our geographic segments. Our businesses are focused on remaining profitable as well as planning for growth when the upturn comes.

On future outlook, Chairman Ian Kirkpatrick said, "the Group continues to trade resiliently in the current difficult environment and visibility remains limited, particularly in recruitment. The short term outlook is dependent on increased activity in the second half and the upturn in sentiment, which we are already starting to see in the UK, resulting in increased volumes of permanent recruitment."

"The majority of our businesses across the Group have performed well in very challenging markets and we are pleased to have maintained our revenues in line with the previous year, demonstrating tangible gains in all of our geographic segments. Demand for outsourcing continues to be buoyant, generating an encouraging volume of opportunities."

In early trading Harvey Nash's shares were up 4.19% to 54.70 Pence.

 

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