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UK-based recruiter Hays PLC (HAS:LSE) is expecting volatile market conditions to continue into the next year after suffering losses in its domestic market. But the firm today reported strong international growth as Group revenues in 2012 rose by +12% to £3,654.6 billion for the year ending 30 June 2012.
The staffing firm said that current trading conditions are mixed and becoming more difficult in the permanent recruitment markets. It said the temporary placement market was resilient as net fees from temporary staffing, which represent 56% of Group fees, were up by +12% in its 2012 financial year.
“Looking ahead, whilst we continue to see pockets of growth and opportunity in certain markets, overall the environment remains challenging and in some countries very difficult. We will continue to react quickly to changing conditions in each market, investing selectively to capitalise on growth and defending the financial performance where markets are more difficult,” the company said.
In the 12-month period to 30 June 2012, the staffing firm increased net fees by +9% to £734.0 million as operating profit was up +12% to £128.1 million, mainly driven by concentrated cost control. Profit before tax rose to £122.4 million, a yearly increase of +11%. Profit after tax, attributable to shareholders, increased +8% to £86.5 million.
“Delivering profit growth above our net fee growth in the increasingly difficult markets we faced is a good result,” said chief executive Alistair Cox. “We have focussed on getting the balance right between continued investment to grow our business and rapid action to control costs as many of our markets tightened throughout the year,” he said.
Internationally, net fees increased by +16% to £266.5 million, driving total Group performance by +8%. The firm spoke of a record performance in Europe & the Rest of the World as net fees here increased by +23% with Germany, Brazil, Canada and France taking the lead. Operating profit in this region rose by a total of +35% to £43.7 million.
In continental Europe the firm covers 14 countries and the German market, the largest in this division, proved to be particularly strong with net fee growth of 30%. Elsewhere in Europe, activity was significantly impacted by the Eurozone crisis. In France net fee grew by +17% despite a slowdown in the permanent market. Benelux saw net fee grow of +18% while Spain grew by only 3%.
But business in the UK “became increasingly challenging”, Hays said, as total net fees for the UK & Ireland were down -7% to £225.3 million despite cost reductions introduced this year to protect the firm’s financial performance. UK consultant headcount was reduced by 10% and the office network was trimmed by 12%. Nevertheless, the firm made an operating loss of £6.5 million while net fees fell by -8% in the permanent placement business and by -6% for temporary placements.
In the UK, net fees in the public sector dropped by -8% and by -6% in the private sector, dragged down by lower activities in the banking sector. In Ireland business performance was better with net fees growing by +30%.
In Asia Pacific net fees were up +15% to £242.2 million, seeing +11% growth in Asia and +10% in Australia & New Zealand. In Japan net fees increased +16%. Overall, operating profit for this region was up by +16% to £90.9 million.
Hays is the sixth largest staffing firm in the world, according to Staffing Industry Analysts' new ranking of largest global staffing companies. The company operates in a number of professional staffing sectors, notably accountancy & finance, construction & property as well as IT.
In its results presentation this morning, the company highlighted Life Sciences and IT as the more resilient staffing sectors on a global basis. According to Staffing Industry Analysts recent report, Hays is the market leader in Clinical/Scientific staffing in Europe.
Given the rather gloomy outlook, after publishing its financial results this morning, the company’s share price dropped by -7.6% to 70.80 pence, down -4.8% from a year ago and +20.6% above the 52-week low of 58.69 pence seen in December 2011. The firm has a market value of £1.07 billion, making it also the sixth largest staffing firm based on market capitalisation.