Hays plc - Trading update
Hays plc - Trading update
Fourth quarter ended 30 June 2009
Commenting on trading for the quarter ended 30 June 2009, Alistair Cox, Chief Executive of Hays plc, said: 'This has been another tough quarter with continued reductions in demand across all the 28 countries in which we operate. However, throughout this year our business has demonstrated that it has the ability to withstand exceptionally difficult economic conditions and still deliver good levels of profitability and strong cash flow performance. Although we have rapidly adapted our cost base to address reductions in demand levels, we have also been able to continue to invest in the business.
During the second half of the year we have continued to invest selectively in our international network, starting operations in India and Russia. We have made good progress rolling out our IT platforms across a number of our businesses, giving us state of the art systems with which to service our clients and candidates. We have also achieved a number of major client wins in both the public and private sectors which increase our share of their recruitment spend. All of these investments are designed to ensure we build market leadership, both during the current downturn as well as in the next cycle of growth.
Currently, demand continues to weaken in both our temporary and permanent placement businesses. The experience of our management teams across the world, our leading market positions, the balance of permanent and temporary placement business, the strength of the balance sheet, the early actions we have taken to reduce the cost base and our strategy of continuing to invest selectively, position us well both to deal with the short term market conditions and to capitalise on the long term opportunities.'
Growth in net fees for the quarter ended 30 June 2009 Growth
(versus the same period last year)
United Kingdom & Ireland (45)% (45)%
Asia Pacific (43)% (46)%
Continental Europe & RoW (13)% (25)%
Total (37)% (40)%
Permanent (54)% (57)%
Temporary (20)% (23)%
Total (37)% (40)%
In the quarter ended 30 June 2009, Hays plc, the leading global specialist
recruitment group, saw a reduction in net fees of 37% (40% on a like-for-like
basis*) versus the same period last year. The difference between the headlineand like-for-like growth rate is due to the more favourable Euro and Australian dollar exchange rates. During the quarter we reduced headcount by 8%, with reductions across all regions. Over the financial year, we have reduced headcount by a total of 26%.
Net fees from the permanent placement business decreased by 57%* and net fees from the temporary placement business decreased by 23%*. In June, Group net fees were around 42%* below the same period last year.
United Kingdom & Ireland
In the United Kingdom & Ireland, net fees fell by 45%* versus the same period last year as market conditions deteriorated further across the private sector, particularly in the permanent placement market. Our public sector business continued to be relatively resilient, although fees decreased by 3% versus the same period last year.
We have continued to take action to address the reduction in demand levels.
During the quarter, we reduced the headcount in the United Kingdom & Ireland business by a further 5% which brings the total reduction to 26% over the financial year. We have sought to drive efficiency by consolidating operations in some locations resulting in the closure of 15 offices during the quarter which reduces our number of offices in the United Kingdom & Ireland to 212.
In Asia Pacific, net fees decreased by 46%*. Conditions in the permanent placement market were difficult in nearly all sectors and regions. Demand in the temporary placement market was relatively stable during the quarter, although at levels below last year. Demand in the public sector continues to be more resilient than the private sector although it is now falling.
We reduced headcount by 12% during the quarter which brings the total headcount reduction in the region to 36% during the financial year.
Continental Europe & Rest of World ('RoW')
In Continental Europe & RoW, net fees decreased by 25%*. Our German business, which is primarily focused on the IT contracting market, experienced a 7%* reduction in net fees as market conditions softened. In all our other major countries in the region, which are principally focused on the permanent placement markets, net fees fell by 37%* overall. Headcount was reduced by 12% during the quarter with reductions across all countries bringing the total reduction over the financial year to 18% (25% excluding Germany).
As part of our strategy of selectively investing, we started operations in Russia where we see excellent long term opportunities for Hays. Our business in India, which we started in the previous quarter, is making good progress.
Cash flow and balance sheet
We achieved excellent cash flow from operations in the quarter benefiting from our continued focus on cash management. The balance sheet remains strong with net debt significantly below the level at 31 December 2008.
Currently, demand continues to weaken in both our temporary and permanent placement businesses. The experience of our management teams across the world, our leading market positions, the balance of permanent and temporary placement business, the strength of the balance sheet, the early actions we have taken to reduce the cost base and our strategy of continuing to invest selectively, position us well both to deal with the short term market conditions and to capitalise on the long term opportunities.