Staffing firm Hays (HAS) falls 2% to 148p on Tuesday after it publishes flat fee growth for the final quarter of its financial year against expectations of a 2% to 3% increase.
However the shares seem to be supported as earnings look broadly in line with estimates and analysts are penciling in a special dividend payment thanks to the firm's healthy year-end cash pile.
In its biggest market of Germany, Hays' fees grew by just 2% compared with 19% a year ago. An economic slowdown means that companies are delaying expansion plans and cutting back on spending, particularly in manufacturing and the car sector.
German demand for technology staff, Hays’ biggest specialist area, was still robust but fees from engineering were flat while construction and property fees were 11% down on a year ago.
Fees in France and Belgium were down 2% and 4% respectively, while fees in Poland and the Netherlands were down even more sharply at 9% and 15%.
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Growth in Asia was better with Greater China fees up 8% and Hong Kong up 18% although this is likely to have reversed somewhat in the current quarter due to the anti-government protests. Fees in Japan grew by 8% to hit a new country record.
However growth in Australia and New Zealand, which represent 18% of net fees, was disappointing at minus 3% compared with a fairly undemanding comparator of 8% in the same quarter a year ago. Public sector fees were flat while private sector fees were down 4%, possibly due to uncertainty over the General Elections in May.
The UK and Ireland, which together generate around 23% of net fees, were understandably weak given the economic and political backdrop but in fairness could have been a lot worse.
Public sector fees, which make up a quarter of the UK total, were up 7% while the private sector pulled in its horns and fees fell by 6% instead.
In terms of regional trends, London saw a 2% fall in fees while the South West and Wales saw fees up 8%. Unusually, the North of England registered a 12% drop in net fees whereas other recruiters have shown the North to be more resilient.
Yet, balancing out the slower growth in fees, profits for the full year are more or less in line with expectations as the firm managed down its cost base in the face of weaker fee growth.
Also, net cash at the year-end was £130m and the company has hinted strongly today that it will ‘consider increasing shareholder returns’ so analysts are penciling a special dividend payment of circa £80m for later this year.
