Staffing firm Hays’ (HAS) results for the six months to December benefited from the ‘return to work’ across its markets.
The firm increased its full year operating profit guidance to between £210 million and £215 million against consensus estimates of £203 million.
The shares traded 3% lower at 138p due to the broad sell-off in markets triggered by events in Ukraine.
RECORD FEES
Fees for the first half rose by 39% on a like-for-like basis to a record £565 million, driven by strong demand from companies and, crucially, improving candidate confidence.
Altogether, 21 countries in which it operates posted record net fee income, with Germany - the firm’s biggest market, accounting for 25% of fees and 35% of operating profits - recording 38% organic growth thanks to record volumes in contracting.
Hays said overall business confidence in its largest market was high, with clients increasingly investing in new projects and extending existing ones.
Fees in the technology division, which generates nearly 40% of income in Germany, rose by 22%, while engineering, the second biggest contributor, saw a 59% jump in fees.
In the UK and Ireland, which represent 23% of fees and 18% of profits, income was up 39% in line with the group average, with private sector fees surging 52% thanks to strong demand for permanent placings.
‘Our New Year return to work has been good overall’, said chief executive Alistair Cox. ‘Conditions in all markets are strong, driven by high levels of business confidence, significant job churn and clear evidence of wage inflation.’
BETTER MARGINS
Operating profit for the first half soared 327% to £101.6 million, representing a margin of 18% on sales against 6% in the same period the previous year and marking a return to pre-pandemic levels.
Costs increased by 21% as the firm increased its consultant headcount by 26% in order to capitalise on the spike in demand and as it invests in its strategic growth initiatives, in particular in the technology discipline.
‘With such growth in our capacity, I am confident we will take further market share, maximising the benefits from both the cyclical recovery and from building leading positions in the sectors of greatest long-term opportunity,’ said Cox.
‘We now expect operating profit for the 2022 financial year to be between £210 million and £215 million, ahead of market expectations, and we see an even clearer route to exceeding previous peak profit levels,’ he added.
BIGGER CASH RETURNS
First half net cash totaled £236.9 million against £379.5 million the previous year, although adding back the £170 million of dividends - including a special payout of £150 million - dished out in November the tally would be well above the prior period.
The firm has already declared a 0.95p per share interim ordinary dividend, but today it said it expected to announce ‘a substantial special dividend’ when its reports its preliminary full year results later this year.
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