Germany saves Hays from serious slide as UK figures fall
STRONG growth in Germany has helped recruitment firm Hays deliver a better-than-feared 1 per cent fall in fees for the first quarter, as Europe’s economic powerhouse offset a sharp drop in the group’s UK business.
Shares in the firm rose almost 6 per cent to 79.5p following the trading update, which analysts described as “encouraging”.
Hays, which employs 7,800 people across 33 countries, said net fees in the UK and Republic of Ireland fell 9 per cent in the three months to the end of September, amid “very difficult” conditions in the banking and construction sectors.
Its Asia Pacific business also suffered a 9 per cent slide, but net fees at its division covering continental Europe and the rest of the world grew by 16 per cent, fees in Germany soaring a record 25 per cent.
While the UK economy remains mired in recession, Germany is benefiting from rising exports and the unemployment rate in Europe’s largest economy fell to 6.5 per cent in September, from 6.8 per cent the previous month, well below the 8.1 per cent recorded in the UK for the three months to July.
Hays chief executive Alistair Cox said: “Conditions through the quarter were stable overall, but remained multi-speed across various geographies and sectors.
“Several parts of the group continued to deliver good growth with 15 countries delivering net fee growth of 10 per cent or more. Amongst these were Germany, which is operating at record levels, Brazil, Canada and Japan.”
However, he said conditions in the UK, southern Europe and parts of Asia were very difficult and the firm expects the “multi-speed environment” to continue.
Yesterday’s upbeat trading statement follows an 11.3 per cent slide in third-quarter profits at rival Michael Page International, which issued its second profit warning in less than a year on Monday.
Michael Page, which has been hit by major cutbacks in the banking sector over recent years, said it expected operating profits for the year to be “slightly below” current City forecasts of just under £68 million.
Staff cuts in the City have also affected Hays as lenders such as Lloyds Banking Group and Royal Bank of Scotland have slashed jobs since the financial crisis, while the recession has also hit the construction and property sectors.
Seymour Pierce is forecasting that the group will deliver pre-tax profits of around £117.9m for the year, down from £122.4m a year ago, but analyst Caroline de La Soujeole said Hays is “clearly outperforming Michael Page”.
She added: “There is good momentum in the business and management cautiously suggested the UK might reach break-even point at the half-year stage, although nine months might be a more realistic target.”
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