Hays sees strong Europe profits, but slow growth in UK
Hays has reported operating profit growth of 15%, as it released its half-year report for the six months ended 31st December 2015.
It saw 14% net fee growth in continental Europe & Rest of World; with operating profit up 17%, a net fee growth of 12% in Germany and 14% in France. 15 countries delivered net fee growth of over 10%, including Poland, Spain and Switzerland, while it saw profit growth of £3.6m in the division outside of Germany.
However, UK & Ireland had a net fee growth of just 3%; with the private sector up 4% and public sector up 1%. Operating profit was up 20% to £25.3m. Hays stated that markets overall were sequentially stable through the half with low growth in the private sector, and public sector markets became increasingly challenging as the half progressed.
In Asia Pacific there was a net fee growth of 4%, with operating profit up 6%, while Australia net fees were up 3%, driven by perm up 7%. Hays added that Asia net fees grew 7%, driven by all-time records in Japan, up 8% and China, up 16%.
Alistair Cox, chief executive, said. "This is a strong first half performance as we converted good 8% net fee growth into 15% profit growth. Market conditions remained good in many areas, particularly Europe, but growth slowed toward the end of the half in the UK and Australia as increased global uncertainty impacted sentiment. Against this backdrop, we successfully balanced further investment with improved business efficiency to deliver excellent operating leverage and a further improvement in our sector leading conversion of net fees into profits.
“This balanced approach sets our performance apart. We invested quickly wherever market conditions and outlook were supportive. As a result we delivered 18 record first half net fee performances, including Germany, France, China and Japan. In the UK, we grew net fees by 3%(1) and improved business productivity to drive exceptional profit leverage. In Australia, although conditions remained mixed we delivered further net fee and profit growth.
“Looking ahead, we are mindful of increasing global uncertainties, but remain positive and see many opportunities to grow. Our business has the scale, diversity, people and technology to capture the many long-term opportunities available to us, while at the same time being nimble enough to respond to fast-changing conditions to maximise profit and cash generation along the way."
Connor Campbell, a senior market analyst at www.spreaex.com, said, “It’s interesting that the UK arm of Hays is struggling at a time when we as a nation are enjoying the highest employment rate since the '70s.
"Hays are excelling in other countries which could suggest that competition is especially fierce in the UK recruitment industry with other bespoke consultants and agencies over saturating the market. Add into the mix the free recruitment sites that are constantly emerging and in-house recruitment appears to be a trend that is coming back in fashion.
"That being said, maybe employers in the UK are just playing it safe for the time being given the uncertain economic times ahead.”