ii view: Hays confirms generous dividend payments

Offering business sector and geographical diversity and paying both ordinary and special dividends. Buy, hold, or sell?

Full-year results to 30 June

• Net fees up 30% to £1.19 billion
• Operating profit more than doubled to £210.1 million
• Final ordinary dividend of 1.9p per share (2021: Nil)
• Total ordinary dividend for the full-year up 134% to 2.85p per share
• Special dividend 7.34p per share, down from 8.93p last year
• Share buyback programme of £75 million

Chief executive Alistair Cox said:

"Performance in all regions was excellent. Our actions to capitalise on long-term structural opportunities, acute skill shortages and strong markets, supported by our ability to increase fee margins and the benefits of wage inflation, delivered record Group fees, 24 country records and 128% operating profit growth.

“We have a clear strategy to continually build market-leading positions in the most attractive structural growth markets, which are characterised by ongoing skill shortages. Our global network, financial strength and highly experienced management teams give me confidence that we can navigate current uncertainties and remain highly focused on delivering our long-term objectives."

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ii round-up:

Hays (LSE:HAS) is a UK and overseas recruitment company. It employs around 13,000 staff in 253 offices across 32 countries. 

It recruits across 20 specialisms with information technology its biggest at around a quarter of fees, followed by accountancy and finance at around 14%. Construction and property make up 11% of overall fees.

For a round-up of these latest results, published on 25 August, please click here. 

ii view:

Founded over a century ago and headquartered in London, Hays today is a constituent of the FTSE 250 index. Germany currently generates its biggest slug of profit at around 36%, followed by Australia & New Zealand at a quarter and the UK & Ireland at a fifth.  

For investors, a backdrop of rising interest rates, elevated geopolitical tensions and a more uncertain economic outlook all offer potential downward pressure on confidence to hire going forward. Rising costs for industry generally should not be forgotten, while pandemic disruption in certain parts of the world such as China continues.    

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On the upside, skills shortages in its core industry segment of IT persist, diversity of both customer industry sector and geographical region have been established, while there is plenty of room for growth in outsourcing of recruitment across many international markets. A forecast future dividend yield of over 8% is also highly attractive. 

On balance, and with demand for skilled labour likely to persist, Hays appears to remain well positioned to take advantage. 

Positives: 

• Business sector and geographical diversity
• Attractive forecast dividend (not guaranteed)

Negatives:

• Economic clouded outlook
• Currency movements can hinder performance

The average rating of stock market analysts:

Strong buy