Hays breathes out as it keep fees flat in tough market

Investors reacted with relief to a tough update from recruiter Hays on Tuesday as the company managed to keep net fees stable in the face of a difficult UK private sector.

Net fees remained flat across the globe, but fell by 1% when stripping out the benefits of an extra trading day in the last three months. Analysts had been expecting a 2% fall.

The news follows profit warnings from fellow recruiters Page and Robert Walters last week.

Liberum analyst Sanjay Vidyarthi said there may be “some relief” that the results were not worse.

The relief in the market was clear as shares in the group rose by more than 8% to 155.7p. Last week they reached their lowest point since January following the updates from Hays’ rivals.

Chief executive Alistair Cox said the company had managed to deliver stable net fees “despite tougher global macroeconomic conditions and reduced business confidence”.

He highlighted that a global portfolio has helped keep the company’s head above water, with record fees in the US – up 12% – and China – up 7% – despite a trade war between the two countries.

“Over many years we have built a highly diversified business which gives us access to the world’s most exciting markets and sectors,” he said.

He added: “I am confident we will continue to appropriately balance investing for the long term while managing the more challenging markets we currently face.”

In the UK, Brexit uncertainty has weighed on the company’s results, with net fees reducing 4%, down an extra percentage point when stripping out the effects of the extra trading day.

In Germany, its biggest market, there were increased signs that clients were trying to control costs, while net fees remained flat. The company faced tough conditions as business confidence fell, especially among manufacturers and car-makers.

Analysts at Jefferies warned that, despite a set of results which beat expectations in the first three months of the financial year, Hays could face difficulties ahead.

“Although first-quarter net fee growth was slightly better than expected and markets are not distressed, trading momentum is likely to be tougher in the second quarter and consultant productivity is starting to ebb,” they said.

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