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UK – Temporary staffing drives Harvey Nash revenue

30 April 2013

Strong demand for temporary and contractor staff has driven sales at professional recruiter Harvey Nash (HVN:LSE), which today announced a +12% jump in revenue for the year ended January 2013. The firm posted growth across major staffing markets, particularly in the UK & Ireland, Asia Pacific and the US.

The company now anticipates market conditions to improve in the second half of 2013 with full-year results in line with current expectations.

Revenue in the 12 months to January grew to £594.7 million, up from £533.0 million in the prior year. Gross profit increased by +6% to £83.0 million with a shift towards contract and temporary recruitment.

Operating profit, adjusted for non-recurring items, increased by +5% to £9.4 million. The company incurred costs related to the relocation of the Group's London headquarters and acquisition expenses of £0.8 million that were absent last year. The company also reported higher finance costs of 0.7 million compared with 0.4 million last year.  Accordingly, profit before tax was down -7% to £7.9 million.

The firm remained cautious looking ahead. “The outlook for temporary recruitment and offshore projects remains encouraging, however, owing mainly to weak demand in Europe, the short-term outlook for the first half of the year reflects the caution in the market,” the recruiter said.

But the firm continues to invest in Europe, announcing in a separate statement today that it has fully acquired the Nordic executive recruiter Bjerke & Luther in a deal worth £1.3 million. Harvey Nash first acquired 50.1% in the company in 2010.

Revenue grows across major markets

Revenue in the UK and Ireland rose +21% to £210.4 million and gross profit was up +9% to £31.2 million. “These results are excellent given the widely reported challenging conditions in the UK and Ireland market. Executive recruitment was patchy throughout the year but contract and temporary recruitment were robust,” the firm said.

In the region, the financial services and banking sector remained weak throughout the year, but the firm noted a recovery in the public sector, including education, healthcare and local authority recruitment. In Ireland, the firm benefitted from a buoyant market for temporary and contract jobs, driven by multinationals based in Dublin.

Despite weak markets in Europe, revenue in Mainland Europe increased +5% to £334.0 billion.  Gross profit was down -2% at £38.0 million with the firm seeing weak demand for permanent staff due to economic uncertainty. 

The Benelux countries posted the strongest growth figures with revenue up +8% and gross profit rising by +18%. This was due to both organic and acquisition-led growth, following the purchase of Belgian technology and project recruiter Talent-IT last year.

The firm recorded losses in France after closing the contingent permanent recruitment business while revenue in the Nordic countries slipped by almost -4%. But German contract recruitment revenues were robust and permanent recruitment remained relatively stable, helped by strong demand in the engineering sector.

In Asia Pacific, revenue more than doubled to £4.7 million from £2.6 million a year earlier. Hong Kong and Sydney saw strong revenue growth. The firm has also won an agreement with Japanese group Mitsui & Co to build the largest call centre in Vietnam and promote software development and business process outsourcing to the Japanese market. Under the venture, Harvey Nash Vietnam will take a 15% stake in MOCAP Vietnam and transfer its non-core call centre business to the new strategic partnership. Mitsui & Co will provide access to the Japanese markets whilst Harvey Nash will focus on its core outsourcing services.

Meanwhile revenue in the USA was up +20% at £45.6 million and gross profit grew +11% to £11.0 million with the firm benefitting from a recovery in the technology market. 

But in early trading, the company’s share price dropped by nearly -4% to 76.50 pence, up +25% from a year ago. Based on this stock price, the firm has a market value of £58.39 million. Following the results announcement, equities research analysts at Panmure Gordon raised their price target on Harvey Nash shares this morning from 66 pence to 99 pence.

Harvey Nash Group is a professional recruitment and outsourcing consultancy, providing staffing services to technology, finance and engineering sectors. It is ranked among the 30-largest staffing firms in the UK.


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