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UK – Hays reports “stable” quarter as European profits rise

09 October 2012

Hays (HAS:LSE), the sixth-largest staffing firm in the world, has seen mixed performance in the three months to September as gross profit dropped by -1% versus the prior year, the recruiter reported today.

Lower demand in staffing services resulted in a -9% fall in gross profit generated from the permanent placement market while temporary staffing grew by +6%.

This comes after competitor Michael Page yesterday reported a disappointing drop in Q3 profits with the firm expecting challenging market conditions to continue for the rest of the year.

Hays spoke of a “stable” quarter as the company’s largest division, Continental Europe and & Rest of the World, was the only region to see growth in the period with gross profit rising strongly by +16%. Germany outperformed other staffing markets in the region as gross profit rose +25% to record levels, driven by both contract and permanent staffing. 

Elsewhere in the region, gross profit rose by +7%. But the firm warned that market conditions remained mixed and fragile, particularly in Southern Europe, with five countries posting a decline in profit. 12 countries increased gross profit by +10% or more while strong growth was seen in Belgium, Brazil, Canada and Russia.

“Conditions through the quarter were stable overall, but remained multi-speed across various geographies and sectors,” said chief executive Alistair Cox.

“Several parts of the Group continued to deliver good growth with 15 countries delivering net fee [gross profit] growth of 10% or more. Amongst these were Germany, which is operating at record levels, Brazil, Canada and Japan. In contrast certain markets, notably the UK, parts of Asia and Southern Europe were very difficult.”

In the United Kingdom & Ireland, gross profit decreased by -9% as the private sector recorded a -14% decline in profits. Hays said that market conditions remained “very difficult”, especially in its banking and construction & property specialisms. Public sector gross profit increased by +10%, driven predominantly by the permanent business, with this segment performing in line with expectations.

In Asia Pacific, gross profit overall decreased by -9% as business in Australia & New Zealand was flagging, seeing a -9% slide in profits due to a sharp drop in permanent placement activities. The firm also noted a slowdown in its resource and mining related business. 

In Asia, gross profit fell by -6% although Japan recorded good growth of +10%. Elsewhere in the region, market conditions remained challenging but stable.

“Looking ahead, we expect this multi-speed environment to continue and whilst overall conditions remain challenging, and some markets are very tough, opportunities for growth exist in many key parts of our business,” said Mr Cox.  

In early trading this morning, the company’s share price jumped +5.4% to 79.25 pence, up +8.9% from a year ago and -15.3% below its 52-week high of 93.55 pence seen in March 2012. The firm has a market value of £1.05 billion, making it the world’s sixth-largest staffing firm by market capitalisation


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