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Staffing firms Hays (HAS: LSE) has reported net fees of £719 million for the full year ending 30 June 2013, a drop of -1% organically compared with net fees of £734 million last year. Operating profit for the period also failed to surpass last years’ figures, dropping to £125.5 million from £128.1 million, equating to a fall of -1% organically.
Hays, one of the world’s largest staffing firms, derives 59% of its net fees from temporary placements and 41% from permanent placements. Temporary net fees for 2013 grew +3% on an organic basis to £423.1 million from £414 million last year. Permanent fees declined during the year by -7% on an organic basis, from £320 million to £295.9 million.
Alistair Cox, chief executive of Hays, commented: “We have delivered a resilient financial performance against a backdrop of fragile market conditions. This highlights the strength of our diverse business model and our ability to react quickly to fast-changing markets. Our focus on controlling costs and driving productivity improvements has returned the UK business to profit. We have invested to drive growth in stronger markets such as Germany and Canada, and we have reacted quickly to reduce costs in more challenging areas; such as Australia, to best defend our financial performance.”
The Asia-Pacific market remained challenging, with the Australian market tough and the Asian market subdued. Net fees for the year fell to £211.8 million during financial year 2013 from £242.2 million in 2012, a drop of -13% organically. Operating profit fell -26% organically; from £90.9 million in 2012 to £67.2 million this year.
The United Kingdom & Ireland there have been early indications of recovery, particularly in terms of improved client confidence. Improvements have been widespread across regions and sectors, with the exception of banking. Levels of growth remain modest, with the company returning to profit primarily due to a successful delivery of cost reduction plans.
The market was stable with a subdued private sector for most of the year. In the United Kingdom & Ireland net fees fell by -1% organically to £222 million from £225.3 million last year. Operating profit was recorded of £5.6 million compared with an operating loss of £6.5 million last year. Although trading conditions in the UK were subdued through the year they were broadly stable and the company returned to net fee growth in the second half.
In the private sector, which accounted for 72% of the division’s net fee income, declined by -6% organically. Markets remained difficult in the Banking and City-related specialisms. The public sector division, representing 28% of net fees delivered growth of +14% on an organic basis compared with a year ago.
Australia remains a tough but broadly stable market. New South Wales and Victoria are stable but continue to remain subdued. Western Australia and Queensland remain stable but fragile. Net fees in Australia decreased organically by -16%. Temporary placement fees fell -10% organically, while permanent fees fell by -25%.
The Asian market, comprising of five countries, continued to improve and accounted for 15% of the division’s net fees, which grew +4% organically in 2013. Japanese net fees grew +3% on an organic basis.
Hays delivered +10% organic growth in Continental Europe and the Rest of the World with net fees rising to £285.2 million from £266.5 million a year ago. Operating profit for the period rose +25% on an organic basis; from £43.7 million in 2012 to £52.7 million this year. Both net fees and operating profit represented records for the division.
Germany, which represented 53% of the division’s net fees, delivered strong organic net fee growth of +13%. In France, the company’s second largest division, net fees increased by +1% organically. A good performance against a difficult market. Seven countries saw net fees decline in the year; including Italy, Spain, Portugal, and the Netherlands. However, 13 countries delivered net fee growth of +10% or more; including Russia, Hungary, and Poland.
In Latin American, the recently opened businesses in Colombia and Mexico performed well. Brazil remains a volatile market and net fees were down -8% on an organic basis. In North America, Canada delivered impressive organic net fee growth of +31%. The USA division continued to perform well, increasing net fees by over +60% on an organic basis, compared with a year ago.
Hays engaged in a series of cost cutting measures during the year which included reduced headcount in some areas and the closure of offices. Headcount in Asia-Pacific fell by 88, and by five in the United Kingdom & Ireland. In Continental Europe and the Rest of the World, headcount grew by 117. Eight offices were closed across the UK & Ireland, consolidating the company’s office network in London.
Looking ahead to 2014, Hays expects the overall market conditions to remain mixed. While some markets are likely to remain challenging, there are also clear opportunities for growth. The company’s focus remains on ensuring the Group is positioned for long-term growth whilst continuing to drive profits.
In trading today, the company’s share price fell -0.69% to £100.70, an increase of +35.38% compared with a year ago. Based on its share price, the company has a current market value of £1.4 billion.