TIDMHAS
RNS Number : 8432P
Hays PLC
15 October 2019
QUARTERLY UPDATE
FOR THE THREE MONTHSED
30 SEPTEMBER 2019
15 October 2019
Financial summary
Growth in net fees for the quarter ended 30 September 2019 (Q1
FY20)
(versus the same period last year) Growth
--------------
Actual LFL
By region
Australia & New Zealand (ANZ) (2)% (2)%
Germany 1% 0%
United Kingdom & Ireland (UK&I) (4)% (4)%
Rest of World (RoW) 7% 4%
------------------------------------ ------- -----
Total 1% 0%
------------------------------------ ------- -----
By segment
Temporary 1% 0%
Permanent 2% 0%
------------------------------------ ------- -----
Total 1% 0%
------------------------------------- ------- -----
Note: unless otherwise stated, all growth rates discussed in
this statement are LFL (like-for-like) fees, representing organic
growth of continuing operations at constant currency.
Highlights
-- Group net fees flat (down c.1%(1) working day-adjusted
(WDA)), with difficult economic conditions and tough growth
comparatives. Flat fees in Perm and Temp, but 8 countries still
delivered all-time records
-- Australia & New Zealand: net fees down 2% YoY (WDA down
c.3%(1) ), although broadly sequentially stable at near-record
levels through the quarter. Temp down 1%, with Perm down 3%
-- Germany: flat net fees (WDA down c.2%(1) ), with
macroeconomic conditions increasingly challenging. Net fees in
Contracting & Temp flat, with Perm down 2%
-- UK & Ireland: net fees down 4% (WDA down c.5%(1) ), with
Temp flat and Perm down 8%, in increasingly difficult markets. Net
fees in the Private sector down 7%, with the Public sector up
6%
-- Rest of World: solid net fee growth of 4%. EMEA was broadly
sequentially stable, and net fees increased by 2%, with France up
3%. Good growth of 7% in the Americas and Asia, led by record net
fees in both the USA, our second largest RoW market, up 12%, and
China up 7%
-- Group consultant headcount increased by 1% both in the quarter and YoY
-- Good net cash position of c.GBP90 million, in line with our
expectations (30 September 2018: c.GBP80million; 30 June 2019:
GBP129.7 million)
Commenting on the Group's performance, Alistair Cox, Chief
Executive, said:
"We have delivered a solid quarter of stable net fees, despite
tougher global macroeconomic conditions and reduced business
confidence. Even with these challenges, ten countries grew fees by
more than 10%, and we produced eight quarterly country fee records,
including the USA and China. Asia and the Americas performed well,
both growing by 7%. Fees were down slightly in Australia, but
remained at near-record levels, while EMEA ex-Germany remained
stable. Germany saw increased signs of client cost control, and the
UK Private sector remained tough.
"Over many years we have built a highly diversified business
which gives us access to the world's most exciting markets and
sectors. Looking ahead, our strong market positions, combined with
our highly experienced management teams and financial strength,
means I am confident we will continue to appropriately balance
investing for the long-term while managing the more challenging
markets we currently face."
Group
In the first quarter, ended 30 September 2019, Group net fees
increased by 1% on a headline basis and were flat on a
like-for-like basis against the prior year. The modest weakening of
Sterling, primarily versus the Euro, increased our reported net fee
growth.
Like-for-like net fees in both our Temp and Perm business were
flat year-on-year. Temp represented 57% of Group net fees, and Perm
43%.
There was one additional trading day in the quarter in our main
markets of Australia, Germany and the UK. We estimate that this
increased net fees by c.1%, and therefore our WDA net fees
decreased by 1%(1) year-on-year. The Group net fee exit rate was
in-line with the WDA rate of growth in the quarter.
Consultant headcount increased by 1% both in the quarter and
year-on-year. This included the effect of our annual graduate
intake which, as expected, was significantly lower than in recent
years. We expect Group headcount to remain broadly flat in Q2 FY20.
During the quarter we opened one new office, in Bremen,
Germany.
For comparison purposes, if we re-translate our FY19 profits at
the average exchange rates seen to date during FY20, our reported
operating profit of GBP248.8 million would be c.GBP248 million.
This is a c.GBP6 million reduction versus the re-translated
c.GBP254 million position at our preliminary results on 29 August
2019. Looking forward, exchange rate movements remain a material
sensitivity to the Group's reported profitability.
Australia & New Zealand (18% net fees)
Net fees in Australia & New Zealand (ANZ) declined by 2% in
the quarter (WDA down c.3%(1) ), versus a tough year-on-year growth
comparative. The overall market is broadly sequentially stable at
near-record levels, although conditions in Construction &
Property remain tough.
Our Temp business, which represented 68% of our ANZ net fees,
declined by 1% and Perm net fees fell by 3%. Public sector net
fees, which represented 34% of ANZ, decreased by 1% while Private
sector net fees fell by 2%.
Australia net fees decreased by 3%. Our largest regions of New
South Wales and Victoria, which represented 57% of Australia net
fees, declined by 6% and 5%, respectively. Queensland fell by 2%,
although South Australia grew by 5% and ACT by 1%.
At the Australian specialism level, net fee growth in IT was
strong at 11%, and HR grew by 6%. Construction & Property, our
largest business with 20% of Australian net fees, remains
challenging and declined by 16%, while Accountancy & Finance
was also difficult and reduced by 13%.
Encouragingly, New Zealand (which represented c.6% of ANZ net
fees) returned to growth with a strong 19%.
Consultant headcount in ANZ increased by 1% in the quarter but
declined by 2% year-on-year.
Germany (27% net fees)
Our largest market of Germany delivered flat net fees (WDA down
c.2%(1) ), versus tough growth comparatives and broad signs of
reduced business confidence and increased client cost control. This
was especially evident in the Manufacturing and Automotive
sectors.
Our Temp & Contractor business, which represents 83% of
Germany net fees, was flat on a like-for-like basis. Contracting,
the larger of the two businesses, declined by 2%, while Temp
delivered solid growth of 5%. Perm continued to slow and decreased
by 2%.
Our largest Germany specialism of IT grew by a solid 4%, with
Engineering down 5%. Sales & Marketing grew by an excellent
21%, although Construction & Property was difficult and
declined 16%. Net fees in Accountancy & Finance were flat.
Consultant headcount was flat in the quarter and increased by 1%
year-on-year.
United Kingdom & Ireland (23% net fees)
Net fee growth in the United Kingdom & Ireland (UK&I)
decreased by 4% (WDA down c.5%(1) ). Growth in our Public sector
business, which represented 28% of UK&I net fees, was good at
6%. In the Private sector, net fees fell by 7%, as business
confidence continued to be impacted by ongoing uncertainties.
Additionally, candidate confidence also weakened across the
quarter.
Net fees in Temp, 57% of UK&I net fees, were flat, although
Perm markets were tougher and net fees decreased by 8%.
All regions traded broadly in line with the overall UK business,
with the exception of the South West & Wales which grew by 4%,
and the Midlands and the North, down 10% and 7% respectively. Our
largest UK region of London fell by 2%. In Ireland, our business
declined by 13%.
At the specialism level, IT delivered solid growth with net fees
up by 5%. Accountancy & Finance and Office Support both fell by
4%, while Construction & Property fell by 7%. Education
continues to be impacted by difficult market conditions in Perm,
with net fees down 11%.
Consultant headcount increased by 2% in both the quarter and
year-on-year.
Rest of World (32% net fees)
Our Rest of World (RoW) division, encompassing 28 countries,
delivered net fee growth of 4%, versus a tough growth comparative.
Growth in Perm, which represented 69% of RoW net fees, was 6% while
Temp was flat. Nine countries delivered growth of more than 10%,
including eight all-time quarterly records. As our net fees in RoW
are predominantly Perm, we estimate there was no material trading
day impact year-on-year.
EMEA ex-Germany (57% of RoW net fees) delivered 2% net fee
growth and was broadly sequentially stable. Our largest RoW
country, France, grew by 3%, Switzerland grew by 7% and Italy
increased by a strong 11%. However, the Netherlands and Belgium
were tougher, decreasing by 12% and 7% respectively, and Spain
declined by 6%.
The Americas (23% of RoW) increased net fees by 7%. This was
driven by a record quarter in the USA, our second-largest RoW
country, with strong 12% growth. Mexico grew by an excellent 36%,
although Canada was weaker and fell by 5%.
Asia (20% of RoW) also grew by a good 7% overall, led by a
quarterly record in China, our largest Asian country, also up 7%.
Japan grew by 3%, while growth in Malaysia was an excellent
32%.
Consultant headcount increased by 2% in the quarter and by 1%
year-on-year.
Cash flow and balance sheet
Net cash was c.GBP90 million at 30 September 2019 (30 September
2018: c.GBP80 million; 30 June 2019: GBP129.7million). The decrease
in the quarter was in-line with our expectations and is due to the
normal timing and phasing of cash flows.
(1) The estimated working day impact is calculated in relation
to the Temp and Contractor businesses only. For Q1 FY20, this
equates to an adjustment for the quarter's one additional working
day in our major Temp and Contractor markets. Consistent with our
historical approach, we make no estimate for any impact on our Perm
business, or for any 'bridge' holiday days that Temps may take,
which occur around public holidays and can impact our Temp
business.
Enquiries
Hays plc
Paul Venables
David Phillips +44 (0) 20 3978 2520
+44 (0) 20 3978 3173
Finsbury
Guy Lamming Group Finance Director
Anjali Unnikrishnan Head of Investor Relations + 44 (0) 20 7251 3801
Conference call
Paul Venables and David Phillips of Hays plc will conduct a
conference call for analysts and investors at 8:00am United Kingdom
time on 15 October 2019. The dial-in details are as follows:
+44 (0) 20 3003
Dial-in number 2666
Dial-in number (UK +44 (0) 80 8109
toll free) 0700
Password Hays
The call will be recorded and available for playback for seven
days as follows:
+44 (0) 20 8196
Replay dial-in number 1998
Access code 2902738#
Reporting calendar
Trading Update for the quarter ending 31 December
2019 16 January 2020
Half-year results for the six months ending 31
December 2019 20 February 2020
Trading Update for the quarter ending 31 March
2020 16 April 2020
Hays Group overview
As at 30 June 2019, Hays had c.11,500 employees in 265 offices
in 33 countries. In many of our global markets, the vast majority
of professional and skilled recruitment is still done in-house,
with minimal outsourcing to recruitment agencies, which presents
substantial long-term structural growth opportunities. This has
been a key driver of the diversification and internationalisation
of the Group, with the International business representing c.77% of
the Group's net fees, compared with 25% in 2005.
Our c.7,800 consultants work in a broad range of sectors. Our
expertise stretches across 20 professional and skilled recruitment
specialisms, and as at 30 June 2019 our three largest sectors of IT
(23% of Group net fees), Accountancy & Finance (15%) and
Construction & Property (13%) together represented 51% of Group
net fees.
In addition to this international and sectoral diversification,
the Group's net fees are generated 57% from temporary and 43%
permanent placement markets, and this balance gives our business
model relative resilience.
This well-diversified business model continues to be a key
driver of the Group's financial performance.
Cautionary statement
This Quarterly Update (the "Report") has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the UK Financial Conduct Authority and is not audited. No
representation or warranty, express or implied, is or will be made
in relation to the accuracy, fairness or completeness of the
information or opinions contained in this Report. Statements in
this Report reflect the knowledge and information available at the
time of its preparation. Certain statements included or
incorporated by reference within this Report may constitute
"forward-looking statements" in respect of the Group's operations,
performance, prospects and/or financial condition. By their nature,
forward-looking statements involve a number of risks, uncertainties
and assumptions and actual results or events may differ materially
from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be
met and reliance shall not be placed on any forward-looking
statement. Additionally, forward-looking statements regarding past
trends or activities shall not be taken as a representation that
such trends or activities will continue in the future. The
information contained in this Report is subject to change without
notice and no responsibility or obligation is accepted to update or
revise any forward-looking statement resulting from new
information, future events or otherwise. Nothing in this Report
shall be construed as a profit forecast. This Report does not
constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase or subscribe for any shares
in the Company, nor shall it or any part of it or the fact of its
distribution form the basis of, or be relied on in connection with,
any contract or commitment or investment decisions relating
thereto, nor does it constitute a recommendation regarding the
shares of the Company or any invitation or inducement to engage in
investment activity under section 21 of the Financial Services and
Markets Act 2000. Past performance cannot be relied upon as a guide
to future performance. Liability arising from anything in this
Report shall be governed by English Law, and neither the Company
nor any of its affiliates, advisors or representatives shall have
any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from any use of this Report or its contents or
otherwise arising in connection with this Report. Nothing in this
Report shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
LEI code: 213800QC8AWD4BO8TH08
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END
TSTBCBDGIGBBGCS
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