Daily NewsView All News
Net fees were up by +18% in Q1 2011 compared to Q1 2010 at Hays Plc (HAS:LSE), the fifth largest staffing company in Europe. On a like-for-like basis (organic growth at constant currency), net fees were up by +16%.
On a like-for-like basis, net fees from the temporary placement business increased by +8% and net fees from the permanent placement business increased by +27%, as the group continued to see good momentum across most of its markets.
The group's underlying temporary placement margin remained stable and in line with the previous quarter. The group's consultant headcount increased by +3% during the quarter, driven by ongoing investment in Australia, Asia,
Continental Europe and South America, with headcount decreasing slightly in the
United Kingdom. During the quarter, the group added a new office in Delhi,
India, as the group continues to build its international platform for growth.
Net debt increased modestly to around 130 million Pounds at the end of the period (31 December 2010: 125.7 million Pounds). The group expects net debt to remain at a broadly similar level through the next quarter.
On 1 April 2011 the Competition Appeal Tribunal (CAT) announced its judgement in respect of Hays' appeal against the level of the fine imposed by the Office of Fair Trading (OFT) in September 2009. The CAT reduced the fine from 30.36 million Pounds to 5.88 million Pounds. This decision represents the outcome of previously reported proceedings which began in June 2006. The full amount of the fine has already been provided in Hays' 2010 accounts.
In the United Kingdom & Ireland net fees decreased by -2% and overall Hays saw broadly stable net fee trends. The group has continued to achieve strong net fee growth in the private sector business, which increased by +18%, notably in the Construction & Property, IT, Legal, Corporate Accounts and City-related businesses. The public sector business, which represents 24% of the division's net fees, continues to face difficult market conditions with net fees decreasing by -37%. This business is now down around 50% from peak levels. In an interview with Bloomberg this morning, Paul Venables, Hays Finance Director, said the Company has seen "little evidence" so far that private-sector hiring is making up for public sector job cuts. He went on to tell reporters that "I think in the public sector and in our business I would expect to see the next two years to be bumbling along the bottom, so we don't expect to see growth."
Consultant headcount decreased by -1% in the quarter and is expected to remain broadly stable through the next quarter.
In Continental Europe & the Rest of the World (RoW) Hays recorded net fee growth of +35% on a like-for-like basis. The German business had another excellent quarter with like-for like net fee growth of +39% and continues to see strong momentum. Growth was broadly based across the contracting, temporary placement and permanent placement business, and across all of the sectors in which Hays operates.
Most other countries in the division continued to see improving market conditions with 16 countries recording like-for-like net fee growth above +20%. Strong performances were recorded in Brazil, the Netherlands, Spain, Italy, Poland, Austria, Russia and Denmark which each achieved like-for-like net fee growth in excess of +40%, with record results in Brazil, Belgium, Italy, Russia and Denmark.
Consultant headcount increased by +8% during the quarter as the group continues to invest across the division.
In Asia Pacific Hays recorded like-for-like net fee growth of +23%. In Australia & New Zealand net fees increased by +21%, with permanent placement net fee growth of +21%and temporary placement net fee growth of +21%, all on a like-for-like basis.. The combined impact of the Queensland floods and Christchurch earthquake reduced like-for-like net fee growth in Australia & New Zealand by -2% this quarter and these are together expected to reduce net fees and operating profits by between 1 million Pounds and 2 million Pounds in the second half of the year. Despite these disruptions, overall net fee momentum continues to be good, with broad based growth across regions and sectors, particularly in Banking and Resources & Mining.
Asia, which accounts for 13% of the division's net fees, achieved like-for-like net fee growth of +43%. Performances in China, Singapore and Hong Kong each achieved like-for-like net fee growth in excess of +65%, with record performances in China and Singapore. The tragic events following last month's earthquake in Japan have significantly impacted Hays' operations there, which are largely based in the Tokyo district. The group therefore expects that this business, which generated 6.9 million Pounds of net fees and 2 million Pounds of operating profit in the six months to December 2010, will be materially affected in the coming months. The impact of the earthquake reduced like-for-like net fee growth in the Asia region by -5% this quarter and the group expects that net fees and operating profit will be reduced by around -2 million Pounds versus previous expectations in the second half of the year.
Consultant headcount increased by +5% during the quarter, with headcount up +10% in Asia.
Alistair Cox, Chief Executive of Hays Plc, said "we have had another quarter of strong and broad based growth led by our International business which grew its like-for-like net fees by +29% versus prior year. We recorded excellent growth in Continental Europe, South America and Asia, with another quarter of strong growth in Australia. Overall, 21 countries grew like-for-like net fees by more than +20%. In the UK, net fees remained broadly stable overall with strong growth in the private sector offset by tough public sector markets."
"Our operations in Queensland, Christchurch and Tokyo have each faced natural disasters of unprecedented scale, but the response and fortitude of our employees there has been a credit to them and to our business. Despite these events the outlook remains positive in nearly all of our markets outside the UK public sector and we continue to invest in consultant headcount, particularly in the International business which grew headcount by +7% in the quarter."
The group now generates nearly two thirds of its fees from the International business. This extensive platform, together with the investment made across the business, provides the group with the basis from which to capitalise on the long-term structural growth opportunities in our markets."
In early trading Hays' shares were down by -2.09% to 117 Pence.