Interactive Investor

ii view: Hays flags improving momentum

13th April 2021 16:05

Keith Bowman from interactive investor

This global recruiter has upped its full-year profit forecast. We assess prospects.

Third-quarter update to 31 March

  • Fees down 10%
  • Net cash of £385 million, up from £379.5 million in December


  • Full-year 2021 operating profit is expected to be at least £85 million

Chief executive Alistair Cox said:

" Despite our markets remaining impacted by the pandemic, we continued to see improving momentum across the quarter and I am pleased to say Group fees were ahead of our expectations.

"Our market-leading positions, strong management teams globally and financial strength mean we are well-placed to capitalise on the opportunities we see. We are confident we will continue to take further market share as clients and candidates look for our expert recruitment guidance, both during and after Covid."

ii round-up:

UK and overseas recruiter Hays (LSE:HAS) today raised its full-year profit expectation to at least £85 million following sequentially improving monthly hiring demand and a robust March performance.

That exceeds City forecasts for nearer to £60 million, although is still down on last year’s operating profit of £135 million. Overall fees fell by 10% in the third quarter, better than the retreat of 19% seen during the prior second quarter.

Hays shares rose by more than 2% in UK trading, leaving them up by more than 50% since late October and just prior to the announcement of vaccine development success. Rival Page Group (LSE:PAGE) recently reported a similar strong March performance. Shares for Page and rivals SThree (LSE:STEM) and Robert Walters (LSE:RWA) are all up by a similar amount over the same time. 

Net fees for its biggest market Germany, accounting for just over a quarter of overall fees, retreated by 5%. Declining fees for its biggest and second largest specialisms IT and engineering, were partly offset by growth in both life sciences and construction and property.

In the UK and Ireland, generating around a fifth of total fees, a 14% decline in net fees was aided by its teacher recruitment business and the return of students to UK schools following their previous closure under virus lockdowns.

Net fees for its Rest of the world division, accounting for around a third of overall fees and covering 28 countries, fell by 8%. Temporary hires, down 2%, outpaced an 11% retreat in permanent hires. 

Consultant headcount rose by 3% during the period, although fell by 12% year-on-year. Hays expects headcount to rise by a further 2% to 4% during the fourth quarter as it invests in both its 'return to growth' programme and in other recruitment specialisms.

ii view:

Hays employs around 10,000 staff in 257 offices and across 33 countries. It recruits across 20 specialisms with IT, accountancy and finance and construction and property its three largest and generating just over a half of all group fees. 

Temporary and permanent fees are split in a rough 60% to 40% divide. Its overseas business now accounts for around three-quarters of income, up from around a quarter in 2005. The recruitment industry is geared to economic cycles and as such is highly cyclical in nature.  

For investors, fees continue to fall while outlook uncertainty regarding the pandemic persists. That said, sequential monthly improvements in fees have been seen, and the half-year results flagged an expected return to dividend payments come the August full-year results. Navigation of the 2008 financial crisis has left the board highly experienced in dealing with economic downturns. In all, while room for caution persists, diverse exposure to likely economic recovery should bode well longer-term.  


  • Business sector and geographical diversity
  • Strengthened finances


  • Covid clouded outlook
  • Dividend payment previously suspended

The average rating of stock market analysts:

Strong hold

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