Hays has high hopes for profits as UK hiring market bounces back

Recruiter Hays said full year profits were likely to be at the top of the current range of market forecasts after it drummed up a record level of quarterly net fees, helped by the UK decline beginning to ease off.

With good conditions in almost all of its of our markets, net fees grew 21% in total as 34% growth in the rest of the world easily offset a 4% LFL decline in the UK, which was an improvement on the 10% decline in the first half but still dogged by a tough public sector market.

The FTSE 250-listed group reported continued signs of improvement in the UK's private sector market, with fees down 1% as modest signs of improvement continued after the major drop-off after the EU referendum.

Chief Executive Alistair Cox hailed the all-time quarterly record net fee performance and said he was confident that full year operating profits would be near the top of the current £199-209m range of estimates.

"Growth was broad-based and driven by strong performances in our International businesses. Europe delivered excellent results, led by an all-time record performance in Germany, as we continued to invest in additional headcount. Growth in Australia accelerated further and was strong across all states."

Net cash at the period end stood at £40m.

Analysts said it provided more evidence of global growth picking up and that UK businesses had regained confidence post the initial Brexit blip.

Following on from better-than-expected numbers from FTSE 250 rivals Robert Walters on Tuesday and PageGroup on Wednesday, Hays became the third big recruitment firm to show improved fee momentum not only abroad but at home, said Russ Mould, investment director at AJ Bell.

“Each of the big three has a slightly different mix in terms of geographic focus, where Page has a presence in the US and Latin America, and client industries, with Robert Walters more heavily exposed to financial services and Hays to the public sector in the UK, for example.

“Nevertheless, all three are showing a marked improvement in fee income growth, on a constant currency or like-for-like basis at group level. The Americas led the way at Page and Robert Walters for their fiscal first-quarter figures while Europe and Rest of the World showed the best growth at Hays in its third-quarter trading update."