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Hays’ operating profit down 18% in H1 2019

Hays has released its half year report for the six months ended 30th December 2019.

Net fees for the six months £553.1m (H1 2018: £568.0m), down 2% while operating profit for the six months was down 18% to £100.1m (H1 2018: £124.1m). Profit before tax was down 22% to £95.6m (H1 2018: £122.6m). The company also saw a 22% decrease in basic earnings per share to 4.60p (H1 2018: 5.86p).

In the UK, net fees were £126.7m, down 4% and operating profit decreased by 21% to £19.0m. Although the company saw only a 1% drop in temp net fees, in perm, this was down 8%. Net fees were up 8% in the IT sector, and 15% in healthcare, but Hays saw declines in accountancy & finance (6%) and construction & property (8%).

Australia and New Zealand net fees were £94.8m, down 4%, and operating profit was £28.5m, a decrease of 14%. Temp net fees decreased by 2% while permanent net fees decreased 9%. On a sector level, IT (up 5%) and HR (up 7%) performed well, but there were decreases in construction & property (13%), office support (16%), and accountancy and finance (13%).

Germany achieved net fees of £144.9m, down 5% while operating profit fell 20% to £37.0m. Net fees were down in both its temp (5%) and perm (3%) businesses. The country’s largest specialism, IT, saw net fees fall 3%. Engineering fell 10% but the company did see rises in sales & marketing (17%) and legal (4%).

Hays did see net fees increase in its rest of world division – up 2% to £186.7m. Operating profit, however, was down 20% to £15.6m. In EMEA ex-Germany, net fees were flat while in Asia they were up 4%. The company saw good growth in the Americas, up 7%.

Alistair Cox, chief executive, said, "Fee growth slowed significantly through the half, impacted by increased uncertainties and reduced business confidence in most of our major markets, and three specific external events in December. In Germany, trading was increasingly difficult, with reduced business confidence and greater client cost control, particularly in Automotive. The rest of Europe was broadly stable, although France was impacted by general strikes. Australia remained subdued, although fees were broadly sequentially stable until December, when bushfires severely impacted the market. Conditions in the UK remained uncertain, particularly before the Election, although in time the result could provide impetus. Asia grew by 4% overall, led by Japan and Malaysia, although growth in China slowed materially through the half. The Americas performed well, with the USA a standout performer and one of seven countries which produced record half year fees.

"Overall, we have seen a marginally slower New Year 'return to work' than prior years. We expect near-term macro conditions to remain difficult and are mindful of continuing uncertainties, including the coronavirus. While our focus will be on cost management, we also see growth opportunities, for example in the IT sector globally and in the USA, and we will continue to invest in them. Our task is to balance such opportunities while driving efficiency. Our highly experienced management teams, combined with our financial strength, gives us confidence in achieving this balance."

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