RECRUITMENT group Hays recorded strong international growth in its most recent quarter, but saw a 2% fall in fees in its UK and Ireland markets.
A trading update today showed total fees growth of 18% in the three months to March 31, with its Asia Pacific operations turning in a 37% fees improvement and a 32% increase for its continental Europe and rest of the world division.
Today’s statement revealed that strong fees growth in the UK construction and property, IT, legal, corporate accounts and city-related businesses was offset by a 37% fall in net fees from public sector related business, due to Government cuts.
The firm, which has two Liverpool offices in Dale Street and Tithebarn Street, said its UK public sector fees had fallen by 50% from peak levels.
Staffing in its UK division has fallen by 1%, in contrast with a 7% increase in staff across its international operations.
Asia Pacific managed to show improvement, despite natural disasters in Australia, hit by the Queensland floods, and earthquakes in New Zealand and Japan which have impacted on Hays’ operations.
Its Japanese division is largely based in the Tokyo district and today’s statement said: “We, therefore, expect that this business, which generated £6.9m of net fees and £2m of operating profit in the six months to December 2010, will be materially affected in the coming months.
“The impact of the earthquake reduced net fee growth in the Asia region by 5% this quarter and we expect that net fees and operating profit will be reduced by around £2m versus previous expectations in the second half of the year.”
Meanwhile, Hays revealed that a £30.36m fine imposed by the Office of Fair Trading in September 2009 has been reduced to £5.88m by the Competition Appeal Tribunal.
Hays’ construction and property business in the UK had been judged to have breached competition law between October 2004 and November 2005, along with a number of other construction recruitment companies.
The company said the full amount of the fine has already been provided for in its 2010 accounts.
Chief executive Alistair Cox said today: “We have had another quarter of strong and broad based growth led by our international business.”
He said the outlook remains positive in nearly all its markets outside the UK public sector.
“The group now generates nearly two thirds of its fees from the international business. This extensive platform, together with the investment made across the business, provides the group with the basis from which to capitalise on the long term structural growth opportunities in our market.”
Liverpool stockbroker Panmure Gordon recommended Hays as a ‘hold’ for investors after today’s update.
A note by analysts Paul Jones and Mike Allen said: “Some decent quarter three growth from Hays, with broad based progress in a number of areas and driven by international operations.
“We leave our forecasts and recommendation unchanged on this update. Hold.”
