-Full-year profit outlook raised to top end of guidance
-Record Q4 fee income
-Significant cash return expected
Recruitment firm Hays (HAS) posted record fourth quarter net fee income and said full year operating profits would be around £210 million, at the top end of its previous guidance.
The company reported record levels of fees in 15 of its markets thanks to ‘good client and candidate confidence’.
Hays shares advanced 1.6% to 119p although they are still down almost 20% since the start of the year.
BREAKING RECORDS
Net fees for the three months to June were up 23% on a like-for-like basis despite registering a 39% increase in the same quarter last year.
Fees for temporary placements, which make up 55% of group revenues, increased by 16% with a continued improvement in underlying margins while volumes were sequentially stable across the quarter.
Fees for permanent placements, which make up the other 45% of revenues, jumped 31% with ‘high activity levels’ through the quarter and a steady rise in margins.
Revenues from the private sector, which account for 85% of group income, were up by 26%, while public sector revenues grew more slowly at a 7% annual rate.
Growth in Germany, the firm’s largest single market, was a record 29% thanks to unprecedented demand for contractors and permanent staff.
Altogether, 15 countries posted record levels of fee income in the quarter as the firm raised its prices due to surging demand.
By sector, Technology - which is now the group’s biggest specialism generating around £300 million of annual revenues compared with £250 million pre-pandemic - delivered record fees up 24% on the same quarter last year, while Accounting and Finance saw fees jump 31%.
Enterprise fees from outsourced recruitment by large clients also hit a record, up 30% as the firm continues to win market share.
BUMPER PAYOUT
Operating earnings for the year are expected to be around £210 million, even after accounting for the one-off impact of closing the Russian business.
This better-than-expected result, together with the firm’s net cash position of £29 million at the end of June, means shareholders can look forward to a ‘significant’ cash return.
The company bought in and cancelled 15.4 million shares during the quarter as part of its £75 million buyback programme, and has promised to add any residual amount from the buyback to its £100 million cash buffer when working out any special dividend.
Given the residual amount of £57 million, Shares estimates the final dividend, including a special payout, could be in the region of £150 million or 10p per share.
