Recruitment firm Hays said it expects full-year profits to come in ahead of expectations after posting an upbeat trading update, despite ongoing Brexit concerns.
The company, which finds jobs for candidates across sectors from finance to construction in 33 countries, saw a 15 per cent rise in net fees in its final quarter to the end of June, mostly thanks to strong growth in Germany and Australia.
The UK, where Brexit uncertainty has impacted firms’ hiring plans, saw the smallest rise in fees of all regions at 5 per cent.
Hays finds jobs for candidates across sectors from finance to construction in 33 countries
That’s an improvement from a 2 per cent decline in the previous quarter, but Hays also said this was due in part ‘due to easier comparatives’.
In Australia & New Zealand, Germany, and the rest of the world like-for-like growth was higher than the UK at 14 per cent, 16 per cent, and 23 per cent respectively.
Thanks to the strong figures, the FTSE 250 company said it now expected full-year operating profit to be ‘marginally ahead’ of current market expectations of £240.9million.
Boss Alistair Cox said: ‘We have ended our financial year with another record quarterly net fee performance, excellent cash generation, and expect full-year operating profit to be marginally ahead of current market expectations.’
And added: ‘Australia and Germany continued to perform strongly, and despite continuing economic uncertainties our UK business has seen modest improvement.’
Hays’ temporary recruitment, which accounted for the biggest proportion of quarterly fees at 58 per cent, saw an 11 per cent rise in net fee growth on a like-for-like basis.
Its permanent recruitment segment, which accounted for the remaining 42 per cent, saw a much faster growth at 20 per cent.
Hays chief executive Alistair Cox
Views from the City
Russ Mould, investment director at AJ Bell, said that despite talks of global growth slowing down, Hays’ update seems to paint a different picture.
He said: ‘Recruitment companies are a good economic bellwether as companies tend to hire in good economic conditions and delay hiring in bad conditions. Equally, individuals tend to keep moving jobs if they are confident about the economy and they stay put if they are worried about more difficult times.
‘Hays’ Q4 update shows net fee income growth in every single one of its geographic territories and says full-year operating profit will be ahead of market expectations.
‘The UK has the weakest growth at 5%, albeit still a reasonable outcome. Upon closer inspection one can deduce that UK companies may still be slightly nervous about the economy as there is no growth in Hays’ net fee income from permanent jobs.
‘Instead, all the growth is coming from temporary jobs, suggesting that companies want to maintain an element of flexibility in their hiring and not commit to taking on permanent staff.’
Mike van Dulken, Head of Research at Accendo Markets, noted that todays’ trading update sent Hays’ shares to their best level since late February, when shares fell 4.5 per cent from near 2018 highs.
‘The strong growth makes for a solid close to the year and boosts hopes that the trend continues into the new year. The new guidance is likely to lead analysts to tweak forecasts for this year, with a positive knock-on for future years. This could, in turn, see upgrades to both valuations and ratings,’ he said.
And added: ‘The shadow of economic uncertainty may still be hovering over the UK, with Brexit looming, but the region still grew, albeit modestly. International growth remains strong with Australia and Germany singled out. With conditions deemed positive in nearly all markets management says it will continue to invest in key growth areas.
‘Investors are clearly bullish on the outlook for staffing and recruitment, especially with 20 per cent growth in Permanent staffing being almost twice that of Temporary. This split suggests corporate confidence round the world, despite the threat of a trade wars. Might it even suggest that sentiment is improving?’