25th Feb 2015 12:44
LONDON (Alliance News) - Recruitment company Hays PLC reported a rise in pretax profit for the first half on Wednesday on the back of a rise in fee income, but shares in the company fell as it said currency headwinds, which held back fee income in the first half, could harm its full-year results.
The FTSE 250-listed company said its pretax profit for the six months to the end of December was GBP77.3 million, up from GBP62.5 million a year earlier. Net fee income in the half was up to GBP383.9 million from GBP363.4 million last year, as fee income increased across its UK and Ireland, Asia Pacific and Europe and Rest of the World divisions.
But though the group said its overall net fee income growth remains strong in several of its key markets, it warned that the fluctuations in some of its key currencies, particularly the Australian dollar and the euro, could impact on its full-year results.
Shares in Hays were down 6.4% to 149.60 pence early afternoon on Wednesday, one of the worst performers in the FTSE 250.
UK and Ireland net fee income growth in the half was 13%, up to GBP135.1 million from GBP119.5 million last year, with its operating margin in the division improving to 15.6% from 8.3%. The rise in net fee income was driven by strong growth in permanent recruitment, up 21%, and an 8% growth in temporary.
The group saw growth across all operating regions, with its London City business returning to growth with net fee income rising 1% and strong performances in the Midlands, North East, East, South Coast & London (excluding City) divisions. Hays said the UK and Ireland business is well-placed to take advantage of the strong current market conditions and it expects a similarly positive performance in the second half.
Net fee income growth in its Continental Europe and Rest of the World arm was more muted, up 2% to GBP157.4 million from GBP154.1 million a year ago. Growth in the income was held back by the depreciation of the euro against sterling in the half, which dragged back its net fee income by GBP10.9 million.
Fee income in Germany, the biggest contributor to the division, grew 7% at constant currency while all other parts of the business also grew at constant currencies, but its Latin America business was held back by a fall in net fee income in Brazil.
Asia Pacific net fee income also rose, up 2% at actual currency rates, but the results for the division were also held back by the depreciation of the Australian dollar and the Japanese yen against sterling. Australia & New Zealand fees increased 7% at constant currencies, while Asia fees rose 13% at constant currencies.
The company also proposed a 5% rise in its interim dividend, up to 0.87 pence per share from 0.83 pence per share last year.
"This is an excellent first half performance, driven by an acceleration in the permanent recruitment market, as candidate confidence continued to improve in many countries," said Hays Chief Executive Alistair Cox.
"Looking ahead we exit the first half in a position of strength and we are confident in our outlook. We have the scale, diversity, people and technology to capture the many long-term opportunities available to us, as well as driving our profits along the way," Cox added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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