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UK net fee growth up 5% in Q4 2018 for Hays

Hays has released an update for the fourth quarter ended 30th June 2018.

In the fourth quarter ended 30th June 2018, Group net fees increased 14% on a headline basis and 15% on a like-for-like basis against the prior year. This represented its 21st consecutive quarter of year-on-year growth.

 Hays’ temp business, which represented 57% of group net fees, grew 11% in the quarter. Net fees in its perm business, which accounted for 43% of quarterly group net fees, grew strongly, up 20%.

Full-year operating profit is expected to be marginally ahead of current consensus market expectations, which it understands to be £240.9m.

During the year, Hays opened a net seven new offices globally and expanded the capacity of a further 15 to facilitate future growth in its international business.

Alistair Cox (pictured), chief executive, said, "We have ended our financial year with another record quarterly net fee performance, excellent cash generation, and expect full-year operating profit to be marginally ahead of current market expectations. Net fees in our international businesses increased 18% and 24 of our 33 countries delivered double-digit growth, including 16 all-time records. Australia and Germany continued to perform strongly, and despite continuing economic uncertainties our UK business has seen modest improvement.

“Looking ahead, conditions remain positive in virtually all of our markets. We continue to invest significantly in key growth markets where we see structural and market share opportunities, notably Germany, France and the USA. Our focus continues to be on driving profitable, cash-generative growth, leveraging the largest and most balanced global platform in our industry. That allows us to look to the future with confidence."

Growth in the United Kingdom & Ireland was 5% (underlying up c.4%(1)), led by Hays’ public sector business up 12%. This was in part due to easier comparatives following the negative impact of IR35 changes in the public sector, implemented in April 2017. Conditions remained broadly stable in private sector markets, which represented 76% of UK&I net fees and grew by 3%. Overall in H2 FY18, UK&I net fee growth was 2%.

The company’s temp business delivered strong growth, up 10% (underlying c.8%). Growth in public sector temp was strong, up 13%, with the private sector up 8%. Hays’ perm business remained stable, with net fees flat in the quarter.

All regions traded broadly in line with the overall UK business, with the exception of London and the South West & Wales, up 9% and 8% respectively, and Scotland and the Midlands, down 7% and 5% respectively. In Ireland, the business delivered a strong performance, with net fees up 23%.

At the specialism level, IT delivered strong growth in net fees, up 15%. Office support grew by 11%, Construction & property by 6% and accountancy & finance by 2%. Education was down 4%, as it continued to be impacted by tough market conditions.

In Australia & New Zealand, Hays delivered its best quarter since 2008, with strong 14% net fee growth (underlying c.13 %). Growth in its temp business, which represents 67% of its ANZ net fees, was 13%, while growth in  the perm business was 16%. Private sector net fees, which represent 69% of ANZ, grew strongly at 15%, with public sector net fees up 11%.

Australia delivered another strong quarter of double-digit growth, up 16%. Market conditions remained favourable, and growth was broad-based across all major specialisms. Hays’ largest regions of New South Wales and Victoria, representing 58% of Australia net fees, were up by 13% and 26% respectively. Queensland and South Australia both delivered excellent growth, up 21% and 20% respectively.

At the specialism level, net fee growth in IT was 23% and construction & property, the group’s largest business in Australia, grew by 9%. HR delivered growth of 29%, Office support was up 15% and accountancy & finance was up 5%.

Net fees in New Zealand (which represents c.6% of ANZ net fees) fell 13%.

Hays’ largest market of Germany delivered a record quarter, with strong growth of 16% (underlying c.14%(1)), against increasingly tough comparatives.

The business’ temp & contractor business, which represents 83% of Germany net fees, grew by 12% (10% underlying). Contracting growth of 11% was slightly below expectations, although growth in contractor numbers did accelerate in June. Temp delivered strong growth of 17%, with perm net fees up 42%.

Hays’ largest specialisms of IT and engineering both grew by 11%. Growth in accountancy & finance was 40% and sales & marketing was up 26%. Construction & property and life sciences were up 13% and 17% respectively.

Hays’ Rest of World division, encompassing 28 markets, delivered net fee growth of 23%, with 21 markets delivering growth of more than 10%, including 15 all-time quarterly records. As its net fees in RoW are c.70% perm, it estimates there was no material trading day impact year-on-year.

Europe-ex Germany produced strong and broad-based growth of 18%. France, Hays’ largest RoW market, continued to perform strongly and grew 15%, and has delivered its fourth consecutive year of double-digit net fee growth. Growth in its third largest RoW business, Belgium, was excellent at 23%, as was Russia, up 48%. After flat Q3 FY18 growth, Spain re-bounded to deliver a strong 19%.

Asia delivered excellent performance overall, with net fees up 25%. Mainland China, Hays’ second largest Asian market, continued to have strong momentum, up 37%, while Hong Kong recorded the highest growth of 57%, its second consecutive quarter above 40%. Japan grew 12%, although Singapore continues to be tough and decreased 16%.

Net fee growth in the Americas accelerated to 35%, led by its largest market of the USA, which delivered record quarterly net fees, up 40% and Canada, its next largest business, up 41%. Growth in Brazil and Colombia net fees was also excellent, each delivering 22%. Market conditions in Mexico continued to be uncertain, although its performance improved slightly and net fees grew 10%.

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