The international business shored up a weaker result in the UK and Ireland. The international business increased net fees and operating profit by 40% and now represents 42% of overall fee income. Germany and France performed particularly well with strong growth in Australia, New Zealand and Asia.
The UK and Ireland business increased its fee income by 7% to £452.9, but operating profit fell by 3% to £137.3m. This was partly
due to the acquisition of James Harvard earlier in the year, but the group saw deteriorating market conditions in the second half.
Permanent placements did better than temporary placements, up 24% and 14% respectively. However, in the UK the group is seeing demand for permanent placements fall, while temporary placements stagnate.
Net debt remains low at £81.1m.
This year represents Alistair Cox’s first as chief executive and these strong results suggest a capable successor to Denis Waxman. The shares have been hit hard over the past 12 months as markets have anticipated a meltdown in the recruitment sector, falling from over 175p to their current level of 93.75p, down 0.5p on the day.
Although Hays remains vulnerable to a slowdown, only around half of its UK and Ireland profits come from the finance and accountancy sector. The remainder come from construction, IT and other activities, which are likely to prove more resilient in an economic slowdown. The shares now trade at just 8x earnings. While this looks cheap in the long-term, it is difficult to see a catalyst for any significant pick-up in the shares in the short-term.
This article originally appeared on Hemscott.com. Morningstar and Hemscott are now one company. You can see the original version of this article on the Hemscott Web site.
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