Daily News

View All News

UK – Hays shows strong Q3 but net fee drops in UK & Ireland

12 April 2012

One of the largest European recruitment firms, Hays PLC (HAS:LSE), exceeded expectations for its Q3 period by increasing its Group net fee (or gross profit) by +10% organically year-on-year. This rise was helped by a +26% increase in net fees in the company’s largest division, Continental Europe & Rest of World.  Germany had another record performance, showing +36% growth, but, similar to competitor Michael Page which reported results yesterday, in the UK & Ireland the staffing firm was hit by slowing activity in its Banking and City-related specialisms as net fees decreased by -5%. Nevertheless, the firm said it expected full year operating profit to be towards the top of current market estimates.

Net fees in the temporary placement business, which represents 56% of Group net fees, saw like-for-like growth of +14%. In the permanent placement business, net fee rose by +5% on a like-for-like basis although uncertainty about the global macro-economic environment impacted confidence levels.

The Group's underlying temporary placement margin remained more or less stable and was in line with the previous quarter. Consultant headcount went up +7% year-on-year, but decreased by -3% during the quarter, driven mainly by the reduction of consultants in certain countries due to a stricter selection of investments.

The firm also reported that net debt decreased to around £160 million (31 December 2011: £178 million).

In the United Kingdom & Ireland net fees dropped by -5% and in the private sector business, net fee was down -6%, mainly due to a slowdown in the firm’s Banking and City-related specialisms. The IT, Legal and Energy businesses continued to deliver good growth, however, in the firm’s public sector business, net fees were reduced by -2% year-on-year. The recruitment firm is currently involved in a cost reduction plan in the region and consultant headcount decreased -5% in the quarter.

Prospects were brighter in Continental Europe & RoW, which represents around 40% of the Group’s net fees. The region grew net fees by +26% organically, and Germany performed strongest across all sectors. The rest of the division, which is primarily permanent placement business, grew by +15% while France recorded growth of +13% organically. Elsewhere, nine countries across the division increased net fees by +20% or more, including Belgium, Brazil, Canada, India and Russia. But, like many other recruitment firms that have recently reported their latest results, business in Southern Europe for Hays was more challenging due to the Eurozone crisis and associated macro-economic uncertainty. Consultant headcount in the entire division decreased by -2% during the quarter and the firm opened a new office in Chile in March.

The staffing firm’s second largest region by net fees, Asia Pacific, grew net fees by +9% organically, matching growth in the Australia & New Zealand business of also +9%. There, the temporary placement business increased by +17% while the permanent placement business was broadly flat. Resources & Mining drove business growth in Western Australia and Queensland but market conditions were tougher in New South Wales and Victoria.

In Asia, which accounts for 12% of the division, net fees grew by +5% organically although market conditions remained subdued in the quarter. Japan performed well as net fees increased by +31% organically while business was slowing in Hong Kong and Singapore, which have a significant weighting towards Banking and Financial Services. Consultant headcount in the Asia Pacific division was broadly stable in the quarter.

Alistair Cox, Chief Executive at Hays, said that the latest financial results reflect an encouraging start to the second half with good performances in many parts of the Group. Looking ahead, he said, that “many parts of the Group continue to grow, but ongoing uncertainty about the global economic outlook means that our markets around the world remain complex and far from uniform.”

“Against this backdrop, we will continue to invest selectively in growth areas whilst at the same time reacting to changing conditions in each of our countries and specialisms to maximise fees and profitability. Our unrivalled global footprint, sectoral diversification and market leadership in so many countries positions us well to capitalise on today's complex markets as well as the long-term opportunities for growth which remain undiminished.”

Encouragingly, the net fee exit rate for the quarter was circa +7% on a like-for-like basis - up on the same period last year, with comparatives strengthening as the quarter progressed.

Hays plc is a global recruiting group and the second largest staffing firm in the UK, according to Staffing Industry Analysts’ research. The Group operates across the private and public sectors, dealing in permanent positions, contract roles and temporary assignments.

In early trading this morning, the company’s share price increased strongly by +9.96% to £89.10, down – 20.87% from a year ago but +51.83% above the 52-week low of £58.69 set on 15 December 2011. This values the company at £1.12 billion. 


Add New Comment

Post comment

NOTE: Links will not be clickable.
Security text:*