Hays profits rise but fears of German economic slowdown weigh on outlook

Recruitment firm Hays generated higher profits in the first half, but fears of slower growth in Germany have spooked investors.

Pre-tax profits rose 8% to £122.6 million in the six months to December 31.

Net fees reached £568 million, up 9% on a like-for-like basis with 20 countries delivering record levels.

In Germany, the company had a record half as net fees rose 14%.

But Hays indicated that growth could be more modest as the country, which is its largest market, amid an economic slowdown.

Slightly lower levels of contractor extensions have already slightly reduced the overall growth rate.

Shares in the company dipped 7% on Thursday as investors adjusted their expectations for the full year.

Analysts at Liberum said the comments regarding the slight slowing of German growth and the impact of foreign exchange movements would likely result in consensus estimates for the 2019 financial year being trimmed by between 2% and 3%.

Meanwhile, in the UK, growth remained solid despite economic uncertainty, with net fees up 3%.

Growth was stronger in the public sector with net fees rising 9%.

The private sector, which accounts for 73% of net fees, grew by 1%.

Chief executive Alistair Cox said: “Looking ahead, although we remain mindful of continuing macroeconomic uncertainty, the outlook in the vast majority of our markets remains positive.

“Our second half focus will be on driving consultant productivity, while selectively investing in our key markets to build on our existing scale, balance and diversity.”