The FTSE’s largest recruitment company in terms of market cap Hays (HAS) is riding high on a strong set of final quarter results.
For the quarter ending 30 June, the company has grown in every region it operates. Even the Brexit troubled UK and Ireland grew 5% on a like-for-like basis, a feat its competitor PageGroup (PAGE) couldn’t match.
One downside in this difficult market, makes up for around oa quarter of the company’s net fees, is that permanent job fee growth was flat.
It was a record quarter for the company in terms of net fee or gross profits with growth exceeding 10% in 24 of its 33 markets and 16 all-time country records.
Shareholders showed their approval suggested by a share price increase of 4.8% to 200.4p. More good news comes from management expecting full year operating profit to be marginally ahead of market expectations at £240.9m.
WORLD KEEPS SPINNING
Russ Mould, investment director of AJ Bell, says ‘for all the talk of global growth slowing down, a fourth quarter trading update from international recruitment consultant Hays would suggest the world’s cogs are still turning at good pace’.
He adds ‘recruitment companies are a good economic bellwether as companies tend to hire in good economic conditions and delay hiring in bad conditions. Equally, individuals tend to keep moving jobs if they are confident about the economy and they stay put if they are worried about more difficult times’.
Shares highlighted how recruitment firms are often good guides to approaching economic downturns as companies tend freeze hiring when times are uncertain.
CASH IS KING
A common factor among the global recruitment sector is high levels of cash generation and Hays doesn’t disappoint. The company’s year-end cash position comes in at around £123m, this underpins a planned special dividend payment of 5p per share or £73m.
Analysts at investment bank Jefferies says that as net fee growth comfortably beat market expectations, earnings per share estimates are ‘likely to rise by low single digits’.
