Hays Sees Deterioration
Hays Interim management statement for the Third quarter ended 31 March 2009
Commenting on trading for the quarter ended 31 March 2009, Alistair Cox, Chief Executive of Hays plc, said: "Market conditions in each of the countries in which we operate deteriorated further during the quarter. Against this backdrop, group net fees fell by 27% (31% on a like-for-like basis) versus the same period last year. We have continued to reduce our cost base with headcount falling by 11% during the quarter bringing our total headcount reduction since the start of the financial year to 19%.
Whilst we continue to cut costs in response to difficult market conditions, we are also investing in gaining market share and in strengthening the business for the longer term. We have enhanced our major corporate account offering and delivery structure which is enabling us to cross sell more effectively into
large blue chip organisations. We are making good progress in developing our technology systems to increase efficiency across the business and we are selectively investing in the international network including starting operations in India during the quarter.
Demand for temporary assignments has been broadly stable following the re-engagement of temporary workers after the Christmas holidays at around 90% of the pre-Christmas level. Demand for permanent placements continues to fall across all our markets.
We expect market conditions will remain tough for some time. However, the experience of our management teams across the world, our leading market positions, our public sector presence, our balance of permanent and temporary placement business, and the strength of our balance sheet, place us in a strong position to deal with these conditions."
Growth in net fees for the quarter ended 31 March 2009 Growth
(versus the same period last year)
United Kingdom & Ireland (37)% (37)%
Asia Pacific (32)% (36)%
Continental Europe & Rest of World 7% (9)%
Total (27)% (31)%
Permanent (43)% (46)%
Temporary (10)% (14)%
Total (27)% (31)%
In the quarter ended 31 March 2009, Hays plc, the leading global specialist
recruitment group, saw a reduction in net fees of 27% (31% on a like-for-like
basis*) versus the same period last year. The difference between the headline and like-for-like growth rate is due to the more favourable Euro and Australian dollar exchange rates. During the quarter, headcount was reduced by 11% primarily through natural attrition and performance management, with reductions being made across all the regions.
Net fees from the permanent placement business decreased by 46%* as market conditions continued to deteriorate across all our markets. Net fees from the temporary placement business decreased by 14%* primarily due to the re-engagement of temporary assignments after the Christmas holidays being lower than last year.
The pace of the fall in net fees increased across the quarter, with an exit
rate of around 30%* below the same period last year (35%* after adjusting for Easter falling in the fourth quarter this year).
United Kingdom & Ireland
In the United Kingdom & Ireland, net fees fell by 37%* versus the same period last year as market conditions deteriorated further across the private sector, particularly in the permanent placement market. However, our public sector business, which represented a third of the United Kingdom & Ireland net fees in the quarter, continued to be resilient, achieving 3% growth in the quarter.
We have continued to take swift action to address the reduction in demand levels. During the quarter, we reduced the headcount in the United Kingdom & Ireland business by a further 9% which brings the total reduction to 27% over the last 12 months. Whilst we will retain our geographical coverage, we have sought to drive efficiency by consolidating operations in some cities resulting in the closure of 14 offices. This brings the total number of office closures to 28 since the start of the financial year.
In Asia Pacific, net fees decreased by 36%*. Conditions in the permanent
placement market were very weak in nearly all sectors and regions. In line with trends for the rest of the Group, demand in the temporary placement market was broadly stable following the re-engagement of temporary workers after the Christmas holidays at around 90% of the pre-Christmas level. Good growth continued to be achieved in the public sector.
We reduced the headcount by 17% during the quarter which brings the total
headcount reduction in the region to 27% since the start of the financial year.
Continental Europe & Rest of World ('RoW')
In Continental Europe & RoW, net fees decreased by 9%*. Our German business, which is primarily focused on the IT contracting market, achieved good growth in the quarter although at a slower pace than previously. In all our other major countries in the region, net fees decreased following a marked reduction in demand in the permanent placement markets. Headcount was cut by 11% during the quarter with reductions across all countries except Germany.
As part of our strategy of selectively investing, we started operations in India where we see excellent long term opportunities for Hays.