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UK - Hays' international growth makes up for weak UK market

06 October 2011

Net fees were up by +21% in Q1 2011 when compared with Q1 2010 at Hays Plc (HAS:LSE), the second largest staffing agency in the UK. On a like-for-like basis (LFL, organic growth at constant currency) revenues were up by +15%.

An interim management statement for the three months ended 30 September 2011 (Q1 2011) reveal that net fees in the temporary placement business increased by +16% (LFL) whilst net fees in the permanent placement business increased by +15% (LFL) as the group continued to see strong performance across the majority of its markets.

The group's underlying temporary placement margin remained broadly stable and in line with the previous quarter. The group's consultant headcount increased by +6% during the quarter, driven by ongoing investment in Asia, Continental Europe and South America. New offices were opened in Cologne in Germany and Guangzhou in China during the quarter, and Hays Colombia was launched in July.

In the United Kingdom & Ireland, net fees decreased by -4% in the quarter. In the private sector business, which represents 80% of net fees in the division, net fees grew by +2%. Growth weakened versus the previous quarter in large part due to tougher comparatives and more difficult market conditions in the banking and City-related businesses. Elsewhere in the private sector business, IT, energy and sales & marketing businesses continued to perform well.

In the public sector business, net fees decreased by -24% year-on-year, but were stable on a sequential basis.

Consultant headcount in the United Kingdom & Ireland division is -7% below prior year levels.

In Continental Europe & RoW, the group recorded net fee growth of +34% (LFL). Across Continental Europe, net fee increases over last year were strong led by Austria (+50%), Italy, (+43%), Denmark, (+41%), Germany (+37%), Netherlands (+35%), Spain (+27%), Switzerland (+26%), Belgium (+23%) and France (+19%). Growth in Portugal was less strong at +7%.

Countries in Central and Eastern Europe also performed well with impressive year on year net fee increases; Russia (more than +100%), Poland (+58%), Hungary (+26%), and the Czech Republic (+19%).

Consultant headcount in the Continental Europe & RoW division increased by +11% during the quarter and is up +36% year-on-year.

In Asia Pacific, the group recorded net fee growth of +21% (LFL). In Australia and New Zealand, the group recorded overall net fee growth of +20% (LFL), within which the permanent placement business grew by +16% (LFL), whilst net fees in the temporary placement business increased by +23% (LFL). Net fee growth was led by the accountancy & finance and IT businesses, and the group continues to see strong performances in Western and South Australia, particularly in resources & mining.

Asia, which accounts for +14% of the division's net fees, achieved net fee growth of +30% (LFL). In China, Hong Kong and Singapore net fees grew by over +30% (LFL) and achieved record monthly net fees in the quarter. In Japan, Hays continues to see good progress following the events in that country earlier this year and net fees increased by +7% (LFL).

Consultant headcount in the Asia Pacific division increased by +5% during the quarter and is up +18% year-on-year.

Alistair Cox, Chief Executive, commented "this quarter we have delivered good net fee growth driven by our International businesses which grew by +27% (LFL). Whilst we are mindful of the increasing macro economic uncertainty around the world, trading remains robust in the vast majority of our International markets and 19 countries across the group grew net fees by +20% (LFL) or more in the quarter. In the UK, we have seen a further slowdown in private sector growth, although public sector markets remain broadly stable on a sequential basis."

"The group now generates 68% of its net fees outside of the UK and has operations in 31 countries worldwide. This increasingly diverse global footprint supported by our investments in consultant headcount, technology, training and marketing leaves us ideally positioned to further capitalise on the long-term structural growth opportunities available to Hays around the world."

In early trading Hays' shares responded well and were up by +8.36% to 73.20 Pence.

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