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UK – Hays profits slip as markets remain “fragile”

28 February 2013

Hays (HAS:LSE), the sixth-largest staffing firm in the world, warned that markets are likely to remain fragile with temporary recruitment showing more resilience than the “volatile” permanent staffing market.

The firm published its half-year results on Thursday which showed that turnover in the six months to December fell -5% organically to £1.73 billion. The firm saw good growth in Germany while markets in Australia and France deteriorated.

Net fees were down -1% organically to £360.3 million. But the firm saw net fees from temporary recruitment rise +4% to £212.3 million, compared to a -7% drop in net fees to £148.0 million from permanent recruitment.

Operating profit in the six months was down -2% to £60.3 million. Profit after tax fell -14% to £33.8 million.

The firm said that current trading was mixed “with encouraging return to work in key temp markets. Overall candidate and client confidence remains fragile, particularly in perm markets. In temp and contractor markets, the return to work has been encouraging to date.”

Mixed performance

In Continental Europe & Rest of the World, net fees grew +14% organically to £139.7 million, driven by strong growth in buoyant markets, including Germany where net fees were up +19% due to high demand for IT and engineering staff.

In France, the second-largest market in this division after Germany, net fees were flat. Italy, Spain and Portugal all saw profits slide in the period while Belgium, Poland and Russia posted growth. In Brazil, net fees improved by +10% despite a “volatile” market.

In the United Kingdom & Ireland, net fees dropped by -6% to £109.4 million. ”Although trading conditions in the UK remain challenging, the business has been sequentially stable through the half,” Hays said. In the private sector, net fees declined by -12%, particularly in the banking sector. In the public sector, net fees grew +15% despite subdued market conditions.

In Asia Pacific, net fees decreased by -11% to £111.2 million, impacted by a -13% fall in Australian net fees. In Japan, net fees were flat because of tough banking and financial services markets while elsewhere in Asia, market conditions remained “challenging” but “stable”.

In early trading, the company’s share price was up +2% to 97.55 pence, up +18% from a year ago. Based on its stock price, Hays has a market value of £1.34 billion.

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