- Fees hit a record in first half
- Margins coming under pressure
- Search under way for new CEO
Global recruitment firm Hays (HAS) posted solid growth in first half revenues but warned conditions in the permanent placement market had ‘tightened’ over the last six months.
Hays shares dipped 1% to 122p, marking three consecutive days of losses as global markets have struggled to make headway.
RECORD FEES BUT MARGINS SQUEEZED
Net fee income for the first half to December climbed 12% on a like-for-like basis to a record £652 million despite what the firm referred to as ‘increasingly tougher’ markets.
There were 19 individual country records during the half, and fees hit a record in September and November, both key months in the employment calendar, with general wage inflation helping the firm increase its fees.
In Germany, the firm’s largest market, net fees were up 24% with contracting and temp fees up 22% thanks to record volumes while permanent fees were up an ‘excellent’ 34% as companies returned to work.
In the UK and Ireland, which account for less than 20% of fees but are still closely watched by the market, fees were up 7% with temp and contracting up 6% and permanent fees up 8%.
However, group operating profits were 8% lower on a like-for-like basis and 3% lower on a working-day adjusted basis at £97 million as operating costs increased by 16% in the half.
Prior to June, the firm had invested ‘significantly’ in headcount to meet the higher level of demand it expected this financial year, but the market in permanent placings in particular has been disappointing with lower average volumes per consultant and a negative effect on profits.
As a result, the firm took action to cut its headcount in the UK, the US, China and Australasia in the second quarter to ‘rightsize’ its capacity.
CHANGE AT THE TOP
Along with the results, the company revealed it was in discussions with chief executive Alistair Cox to start the process of finding a successor.
Cox has led the business for over 15 years, taking it from a UK-focused business to a truly global brand with 255 offices in 33 countries, and will continue in place until a suitable candidate has been found and the handover happens.
