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Global staffing firm Hays (HAS: LSE) reported turnover of £1.8 billion for the six months ending 31 December 2013, flat compared with the same period in 2012 but up by +1% on an organic basis. The company achieved a net fee income of £363.4 million during the period, an organic increase of +2% compared with £360.3 million last year.
Net fees derived from temporary recruitment grew organically by +3% to £216.1 million, up from £212.3 million last year. Hays’ temporary recruitment business represents 59% of total group net fee income. Permanent recruitment revenue increased organically by +2% to £147.3 million, despite dropping slightly from £148 million in H1 2012.
Hays achieved an operating profit for the six month period of £66.7 million, a year-on-year increase of +15% on an organic basis, from £60.3 million a year ago. Net income for the period was £40.6 million, equating to an increase of +20.1% in reported growth from £33.8 million last year.
Commenting on the results Alistair Cox, Chief Executive, said: “We have delivered a strong first half profit performance. We saw conditions improve in several of our key markets as the half progressed, notably in the UK and Asia, and we invested to capitalise on the clear opportunities for growth this presented. Our ability to quickly respond to changing conditions, combined with our unrivalled sector coverage, mix of contract type and market-leading positions in both mature and structural growth countries, sets us apart in today’s market.”
In Hays’ home market of the United Kingdom and Ireland net fee income increased organically during the six month period by +9% to £119.5 million, up from £109.4 million a year ago. The company achieved organic growth of +7% in its temporary recruitment business and +12% in its permanent recruitment business. The UK&I-based business reported an operating profit of £9.9 million for H1 2013, a substantial improvement from an operating profit of just £500,000 in H1 2012.
In the UK, the company’s private sector business, which represented 71% of the division’s net fees, net fees increased organically by +6% and strong double-digit fee growth was reported in several key specialisms; including Construction & Property, IT, and Office Support. Equally, parts of the business which have been subdued for some time returned to growth, for example Accountancy & Finance business which delivered organic growth of +2%.
Asia Pacific is the only region in which Hays reported lower net fee income, which dropped by -10% on an organic basis, from £111.2 million in H1 2012 to £89.8 million this year. The company reported an operating profit of £25.3 million, equating to an organic fall of -22% from £36.3 million a year ago.
In Australia, which represents over 70% of net fees in in the Asia Pacific region, net fees decreased by -17%, on an organic basis. Net fees derived from temporary recruitment, which represented approximately 70% of total country net fee income during the period, fell by -12% in constant currency. Net fees derived from permanent recruitment reported an organic drop of -28%, as confidence among Hays’ clients remained notably subdued. Net fees in the Resources & Mining business fell by -54% during the period, on an organic basis, and remain more than -70% below their peak level before the global financial crisis.
The Australian dollar has depreciated by -10% against sterling since June 3013 which is an area of exchange rate sensitivity for the Company.
Net fee income from Asia partially offset the declines reported in Australia. The region achieved organic net fee growth of +23%. In each of the five countries in which Hays operates, organic growth of more than +10% was reported; including +36% in Singapore and +27% in Hong Kong, and +19% in Japan.
In Continental Europe and the Rest of the World region, Hays reported net fees of £154.1 million, equating to organic growth of +6% from £139.7 million last year. The region reported an operating profit of £31.5 million, an organic increase of +24% from £23.5 million a year ago.
Germany, which represented 54% of the division’s net fees, delivered organic net fee growth of +6%. Although the rate of growth slowed, Hays reported growth in all of its specialisms. Strong growth was noted in the company’s newer specialisms, which now represent 26% of German net fees, particularly Accountancy & Finance, Construction & Property, Legal and Sales & Marketing all of which grew by +10% or more, on an organic basis, compared with last year.
Across the rest of Europe, net fees were up +6%, in constant currency, with improved market conditions overall. Hays reported that they had materially improved their financial performance as a result of increased productivity by their consultants as well as maintaining a continued focus on tight cost control. In France, Hays’ second largest country in the division, net fees increased organically by +2%, a good performance against the backdrop of a market which remained subdued throughout the half. Elsewhere, several countries which have been challenging for some time, such as Italy and Spain, saw improved market conditions and returned to growth during H1.
In Latin America, Hays’ recently opened businesses in Chile, Colombia, and Mexico all performed well. Brazil remains a very challenging market and net fees were down -32%, in constant currency. In North America, Canada delivered solid organic net fee growth of +5% and the business in the USA continues to perform well, increasing net fees by +54%, in constant currency, compared with last year.
Across the division, 13 countries delivered organic net fee growth of +10% or more including Belgium, Russia, and Switzerland.
Alistair Cox concluded: “Looking ahead we exit the first half with clear momentum in several key markets, and while some areas are likely to remain challenging, there are many opportunities for growth. We will continue to react quickly to changing market conditions, investing in stronger markets while reducing costs where market conditions or outlook are more uncertain. Our focus remains on ensuring the Group is positioned to deliver on our long-term objectives to materially grow and diversify the business whilst driving our profits along the way.”
In trading today, the company’s share price rose by +2% to £1.41, an increase of +52.2% compared with a year ago. Based on its current share price, the company has a market value of £1.9 billion.