Hays Profit Rises on Growth in International Business

By Lenka Ponikelska

Sept. 2 (Bloomberg) -- Hays Plc, Britain's largest recruitment company, said full-year profit rose 13 percent as international business growth in Germany and Asia helped to offset a slowdown in the U.K. and Ireland.
Net income for the 12 months ended June 30 was 188.2 million pounds ($337 million),or 13.33 pence a share, compared with 166.5 million pounds, or 11.39 pence a year earlier, London-based Hays said in a statement distributed by PR Newswire today. That beat the 170 million-pound median estimate of six analysts surveyed by Bloomberg News. Revenue rose 20 percent to 2.54 billion pounds.

Demand for permanent placements in the U.K. and Australia declined, said the London-based recruiter. Hays, which gets about two thirds of revenue from the U.K., has sought to expand in faster-growing markets outside its home country. Hays said in April it plans to boost net fee income from international business to 70 percent within the next 10 years compared with about 42 percent today.

``A number of markets are becoming more difficult,'' Chief Executive Officer Alistair Cox said on a conference call with reporters today. ``We paused investments in one or two places but we have a diversification in 27 countries in broad sectors and there are significant opportunities to grow the business.''

Hays fell 0.75 pence, or 0.8 percent, to 93.5 pence in London, valuing the company at 1.29 billion pounds.

Temporary and permanent placements in the U.K. continue to decline and Hays reduced its workforce in the country by 7 percent in the second half to cut costs, Cox said. Hays expects to reduce its U.K. staff numbers further, he said.

`Clear Signs'

``There are clear signs that the U.K. is heading for recession,'' ING analyst Marc Zwartsenburg said by phone today from Amsterdam. ``They already said the U.K. was deteriorating in the trading statement and today they highlighted it again. There's no real trigger that things will get better.'' Zwartsenburg is reviewing his ``buy'' recommendation on the stock.

In Australia, demand among employers for temporary posts has been ``good,'' while demand for permanent placements is flat and Hays has halted further investment in the country, Cox said.
Net fees, or payments from clients minus payroll costs of workers, advanced 24 percent to 786.8 million pounds, said the company. Fees advanced 9 percent in the U.K. and Ireland to 452.9 million pounds. Net fees in Asia Pacific rose 55 percent to 176.2 million pounds. Germany, which accounts for 40 percent of European revenue, boosted net fees 43 percent.

Hays, which has a workforce of 8,872 people in 27 countries, opened 17 new offices in Germany, France, Spain, Poland, Canada and Brazil in the year while closing two sites in the U.K. and Ireland, said the company.

Hays increased its dividend to 5.8 pence, from 5 pence a year earlier.

To contact the reporter on this story: Lenka Ponikelska in London lponikelska1@bloomberg.net