UPDATE: Hays Stays Cautious As Recovery Remains Patchy
April 08 2010 - 3:45AM
Dow Jones News
Hays PLC (HAS.LN), the U.K .-based recruiter with operations
across Europe, Asia and South America, Thursday said that while
jobs markets are recovering in some regions, it is still facing
weakness in key markets like the U.K.
The company, which makes about 46% of its net fees in the U.K.,
remains very cautious on the prospects for the U.K. jobs market
this year, saying it expects "fragile stability" rather than a
recovery. Finance Director Paul Venables said the jobs market
outside London remains in recession, and the upcoming general
election is adding uncertainty to a market lacking any
stimulus.
Whatever the outcome of the U.K. election, economists expect the
next government to cut public spending sharply in an effort of
reduce the country's huge budget deficit. That could lead to a
second wave of unemployment, with the public sector following the
private sector in shedding staff.
Hays warned that resumed growth in the private sector in the
U.K. was already being offset by reduced demand in the public
sector.
Outside the U.K., Hays said it had made selective investments in
Asia, Australia, Germany and Brazil, and its overall consultant
headcount had risen 2%.
"Where markets are recovering, we are now increasing our
capacity and selectively recruiting to meet growing demand," said
Chief Executive Alistair Cox.
However, the growth areas were not enough to offset weakness
elsewhere and net fees in the fiscal third quarter to March 31 fell
5%, or 10% on an organic basis at constant currency.
Net fees were down 18% in the U.K., but rose 23% in Asia
Pacific. Overall net fees in the private sector were down 8% while
net fees in the public sector, which accounted for 23% of total
group net fees, fell 17%.
However, overall net fees were up 2% on the previous quarter,
led by 7% sequential net fee growth in Asia Pacific.
Seymour Pierce analyst Caroline de La Soujeole said the
statement shows that things are getting better, although other
analysts expressed concerns about the future of the public
sector.
At 0915 GMT, Hays shares were down 1 pence, or 0.7%, to 112
pence, slightly outperforming an 0.9% fall in the FTSE 250
Index.
The company said that net debt increased to some GBP80 million,
from GBP38.4 million in December, due to normal phasing of cash
outflows together with a modest increase in working capital as
trading improved through the quarter. Still it added that it has
delivered solid cash flow performance.
Hays shares closed Wednesday at 112 pence, valuing the company
at GBP1.55 billion. They have gained 8% since the start of the year
on hopes that the recruitment market, previously shattered in the
recession, has slowly started to improve.
-By Anita Likus, Dow Jones Newswires; +44 20 7842 9407;
anita.likus@dowjones.com
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