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With the UK's economy mired in recession, the eurozone not clear of crisis and growth in Asia slowing, this is no time to be looking for work. In the UK alone the unemployment rate stands at around 8 per cent compared with little more than 5 per cent before the financial crisis. Such a backdrop is bad news for recruitment agencies - and Hays (HAS) appears to be suffering more than most. Trading in the first quarter of 2012-13 looked bleak. Net fee income fell 4 per cent year on year, with especially weak performances in Asia Pacific and the UK, where fees slumped 8 per cent and 9 per cent respectively. Fee income dropped 11 per cent for permanent placements, which generated 44 per cent of the group's fees in 2011-12. True, fee income rose 2 per cent from temporary placements, but this business could soon struggle. "Corporate customers are focused more on cost control and this means that they may be looking to get more from the temps that they have hired and therefore may need fewer of them," reckon sector analysts at broker JPMorgan Cazenove. Bizarrely, the only sign of resilience was in Europe where the German business grew fee income by 25 per cent. Germany generates 20 per cent the group's fees and has been benefiting from demand in such areas as engineering, life sciences and finance. Whether that remains sustainable as eurozone-related fallout hits, however, is questionable. Earlier this month, for example, the German government cut its estimate for economic growth in 2012 from 1.6 per cent to 1 per cent, a far cry from the 4.2 per cent growth rate achieved in 2010. Hays could suffer more pain in its Asia-Pacific operation, too, with broker Numis Securities pointing to the potential impact of a slowing Australian resources market as a factor to consider.
Hays: Espirito Santo initiates coverage with neutral rating.
Hays: Credit Suisse keeps neutral rating and 85p target.
The Times´ Tempus column says recruiter Hays’ first quarter performance to the end of September was better than the market had feared and better than that of its rival, Michael Page International. Most analysts are shooting for pre-tax profits in excess of £122m for Hays this year and next, which would be an unchanged outturn from last. The shares, up 4.25p at 79.5p, are on 14 times earnings and so well up with events.
Commenting on the Group's performance in the first quarter, Alistair Cox, Chief Executive, said: "Conditions through the quarter were stable overall, but remained multi-speed across various geographies and sectors. Several parts of the Group continued to deliver good growth with 15 countries delivering net fee growth of 10%(1) 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. 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. We continue to invest selectively to fully capitalise on these growth opportunities, whilst focussing on controlling costs and driving productivity around the Group to maximise the bottom line."
http://www.investegate.co.uk/Article.aspx?id=20121009070000PC85B
Recruitment agency Hays (HAS) reported a 4% decline in net fees, year-on-year, for the quarter ended 30th September as continued contraction in the UK, Ireland and Asia Pacific overshadowing growth in Continental Europe and the rest of the world. Like many of its peers, the firm suffered from significantly reduced demand for permanent placements, with fees falling by 11%. Broker Seymour Pierce moved its stance from "hold" to "buy" on the announcement, believing the business "has a more resilient business model compared to Michael Page given its more balanced temp/perm exposure". Hays shares jumped by 4.3p to 79.5p
After Michael Page's profit warning on Monday, shareholders in sector peer Hays must be fearing the worst ahead of the recruiter's third quarter trading update. Peel Hunt says markets are clearly still challenging. "Asian markets, where NFI [net fee income] is weighted towards banking, are weak and European and RoW [Rest of World] markets excluding Germany and Canada have become increasingly tough. Australia is likely to be slowing, as the pause in mining resources activity will likely [have an] impact [on] other sectors in that region," Peel Hunt said.
Keep making my 10% every time hays has a little wobble, I love this share, gets hammered and always tick tocks back up. This run is unbelievable! Don't tell anyone though, doh!
Anyone know?
Net fees in the permanent placement business, representing 44% of group net fees, increased by 3%. The company's global exposure was its saviour with the Continental Europe & Rest of World division delivered 23% net fee growth. This compared with the UK, which became increasingly challenging as the year progressed, with net fees down 7%. The UK division posted an operating loss of £6.5m as net fees fell by 8% in the permanent placement business and by 6% in the temporary placement business. This means fees are now down 50% versus peak levels. Chief Executive Alistair Cox said looking ahead to 2013 the firm expected the overall economic backdrop to remain difficult and markets to continue to be multi-speed. "Several markets are likely to remain very challenging, but these will sit side-by-side with clear opportunities for growth," he said. "Therefore we need to be both adaptable to the world as it changes and selective about areas for investment."
A strong showing in international markets helped recruitment firm Hays offset a loss in its UK division. The company said there would be no let up in the tough market conditions going into 2013. Net fees in the year to the end of June were up 9% to £734m. Profit before tax was up 11% to 122.4m but the company cuts its dividend by more than half to 2.5p. The firm put the cut down to the increased global economic uncertainty impacting on the business, which slowed the pace of the profit growth. The results showed the temporary job market was holding up but making permanent placements was becoming increasingly tough. Net fees from temporary placements, which represent 56% of group fees, increased by 12%. This comprised a volume increase of 4% and growth in the amount of hours worked of 9%, partially offset by underlying margins, which were slightly lower at 14.6%.
Current trading Continued mixed conditions, with pockets of strong growth but overall more challenging, notably in permanent markets Overall trading conditions became more challenging through the second half, particularly in the fourth quarter. The difficult global economic environment continues to have a negative impact on candidate and client confidence in many markets, particularly in permanent recruitment markets. Conditions in Australia are sequentially stable overall, with comparatives becoming tougher. We continue to see growth in Western Australia, although this is offset by tougher conditions elsewhere. In Asia, markets with significant weighting towards banking remain particularly tough. In Continental Europe & RoW, we see continued strong growth in Germany and Canada, and good growth in markets such as Brazil and Russia, but growth is slowing across much of the rest of the division, and net fees are declining in certain countries. In the UK, the market continues to be very difficult. Looking ahead, whilst we continue to see pockets of growth and opportunity in certain markets, overall the environment remains challenging and in some countries very difficult. We will continue to react quickly to changing conditions in each market, investing selectively to capitalise on growth and defending the financial performance where markets are more difficult.
Commenting on these results Alistair Cox, Chief Executive, said: "Delivering profit growth above our net fee growth in the increasingly difficult markets we faced is a good result. We have focussed on getting the balance right between continued investment to grow our business and rapid action to control costs as many of our markets tightened throughout the year. The strong performance of our International business is further clear evidence of the structural growth characteristics of markets such as Germany, Brazil, Canada and Japan. In addition, our performance illustrates the expertise of our teams around the world and their ability to respond to challenges whilst fully capitalising on opportunities in their specific markets. Looking ahead to 2013 we expect the overall economic backdrop to remain difficult and our markets to continue to be multi-speed. Several markets are likely to remain very challenging, but these will sit side-by-side with clear opportunities for growth. Therefore we need to be both adaptable to the world as it changes and selective about areas for investment. Achieving the right balance of building scale for the long term, exploiting stronger market segments and reducing costs and driving productivity to maximise the bottom line in more difficult areas will be key to our success."
Highlights · Strong International net fee growth of 16%(1) driving Group net fee growth of 8%(1) · Good operating profit growth of 9%(1) due to our selective investment approach and focussed cost control · Record performance in Continental Europe & Rest of World, delivering 23%(1) net fee growth - Broad-based growth, with Germany up 30%(1), Brazil up 30%(1), Canada up 25%(1) and France up 17%(1) · Good performance in Asia Pacific, delivering 10%(1) net fee growth with markets increasingly multi-speed - Australia & New Zealand net fees up 10%(1), Asia net fees up 11%(1) with Japan up 16%(1) · The UK market became increasingly challenging as the year progressed, with net fees down 7% - Private sector net fees down 6%. Public sector down 8% but sequentially stable over the year - Cost reductions delivered in the second half to protect the financial performance of the business · Consultant headcount up 1% year-on-year, but down 4% in the second half, reflecting our strategy to capitalise on growth markets whilst maximising Group profit · Excellent cash performance, with 127% conversion of operating profit into operating cash flow(3) · 5% growth in basic earnings per share(2) to 5.47p; full year dividend down 57% to 2.50p, in line with the rebased level announced at the Interim results
http://www.investegate.co.uk/Article.aspx?id=20120830070000PAF9F
Events may have proved challenging for G4S, but the struggle faced by the Far East and particularly China to maintain growth, as well as the way the banking sector seems to be lurching from crisis to crisis means that recruitment agencies such as Hays (HAS) haven’t had the best of times in recent months. This has been tempered by the performance of the group in Germany where the rate of unemployment is lower and hence jobs availability rather greater than for many leading economies. Observers will be looking to see whether the reduced client numbers and candidates confidence reported in July has been maintained, and whether the slight 2% rise in Q2 like-for-like fees doesn’t flip around into negative territory.
The Tempus column in The Times has taken a look at recruitment firm Hays, which surprised many yesterday in a fourth-quarter trading statement by revealing that net fees, and therefore activity from the UK public sector, are ticking up again after three years of decline. However, the paper warns that this isn't an early sign of some sort of public-sector jobs boom. This tick-up was only modest compared to the decline over the last few years and the group still saw a steady decline in the rate of growth in work won at all three geographical divisions across the second half. "As a result, across the group a growth rate of 10% in the third quarter declined to 2% in the fourth and, as the company exited its financial year, growth was non-existent," Tempus said.
"Trading conditions in many markets became increasingly challenging through the quarter as concern about the global economy reduced confidence amongst our clients and candidates, particularly in the permanent recruitment markets," said Chief Executive Alistair Cox. Hays is certainly not alone in this storm, with its competitors also feeling the squeeze. Michael Page said the first half of the year had been tough and it expected more of the same in the second half, while Robert Walters saw a slow-down in Asia Pacific put a dent in its net fee income.
Recruitment firm Hays followed its rivals by reporting on a 'challenging' environment, which was likely to remain unchanged in the near future. The company said like-for-like fees grew 2% in the second quarter of 2012, with the firm getting a big boost from German activities. It saw growth of 14% in Continental Europe and Rest of World, driven by a 25% jump in German fees. This off-set the UK and Ireland, where fees dropped 9%, and its Asia Pacific operation where fees were flat. In the UK, private sector fees were down 14% due to increasingly difficult conditions across the market, but especially in the firm's banking and City-related specialisms. In the Asia Pacific region Hays was hit by poor results from Hong Kong and Singapore, where financial services recruitment also predominates.
ommenting on the Group's performance in the fourth quarter, Alistair Cox, Chief Executive, said: "Trading conditions in many markets became increasingly challenging through the quarter as concern about the global economy reduced confidence amongst our clients and candidates, particularly in the permanent recruitment markets. In that context, I am pleased that we delivered solid growth in Group net fees, driven by growth of 8%* in our International business, where 13 countries grew by more than 10%*, including our market-leading German business. The UK remained very difficult, particularly in the Banking and City-related specialisms. Looking ahead, I expect overall conditions to remain challenging but growth opportunities do still exist. We've deliberately built a business which is well diversified by country and specialism and has a healthy balance of temp, interim and permanent revenues. Each of these markets is different, and we will continue to react quickly to changing conditions in each, investing selectively where we see growth and defending profitability and cashflow where markets are more difficult."
Recruitment agencies continue to struggle, with Hays (HAS) reporting a 10% fall in UK & Ireland net fees during the quarter ended 30th June 2012, year-on-year, with total net fees for the group down by 1%. However, the company noted strong growth in Continental Europe, with Germany reporting a 25% rise in like-for-like net fees. It added that it reduced its net debt position to 135 million pounds from 177.7 million pounds as at 31st December 2011. The shares dropped by 2.5p to 70.55p.
Recent updates from sector peers Michael Page and Robert Walters have not given any reason for shareholders to be overly optimistic about recruiter Hays's trading update on Wednesday. Michael Page said the first half of the year had been tough and it expected more of the same in the second half, while Robert Walters saw a slow-down in Asia Pacific put a dent in its net fee income. On the bright side, as recently as April Hays raised operating profit guidance for the full year, driven by international growth, including 9% growth in Asia Pacific.
Commenting on the Group's performance in the third quarter, Alistair Cox, Chief Executive, said: "We have made an encouraging start to the second half with good performances in many parts of the Group. In our International business, which now accounts for 70% of total net fees, growth accelerated to 18%*. 13 countries around the world grew by over 20%* and our market-leading German business was amongst 7 countries that delivered record performances. In the UK, markets remain difficult, especially in Banking and the public sector. Looking ahead, 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."
Highlights · Good Group net fee growth of 10%* versus prior year · International business delivered strong growth of 18%* and represented 70% of net fees in the quarter · Strong growth of 26%* in Continental Europe & Rest of World, driven by continued excellent performance in Germany which grew by 36%* · Good growth of 9%* in Asia Pacific, with 9%* growth in Australia & New Zealand, and 5%* growth in the rest of Asia · Net fees decreased 5% in the UK & Ireland, with private sector declining 6%. Public sector net fees declined 2% · Based on the Group's year-to-date performance and our current view on outlook, we expect full year operating profit to be towards the top of the current range of market estimates