8th Jan 2009 07:00
8 January 2009 Trading update
for quarter ended 31 December 2008
Commenting on trading for the quarter ended 31 December 2008, Alistair Cox, Chief Executive of Hays plc, said:
"We delivered a resilient performance in the second quarter in the context ofan increasingly difficult economic environment. Overall, Group net fees fell by6% (10% on a like-for-like basis*) as market conditions deteriorated in most ofthe countries in which we operate. Despite this, a number of our international businesses achieved good growth.Our public sector business, which now represents around 30% of fees in the UK,performed strongly. Our highly disciplined approach to cash management resultedin another strong cash flow performance.Demand for permanent placements continues to fall at an increasing rate in theUK and Australia and has recently fallen in a number of other countries. Demandfor temporary placements has been resilient to date across most of the Group.We expect the usual seasonal weakening in January and the outlook for there-engagement of temporary workers after the Christmas holiday is less clearthan in previous years.Over the last year, we have reacted rapidly to deteriorating market conditionsby adjusting the cost base, focusing on cash generation, maximising ouropportunities in both the temporary and permanent placement markets andredirecting resources to increase market share in the more defensive sectors.The experience of our management teams around the world and the strength of ourbalance sheet positions us well to deal with these market conditions."
Group
Growth in net fees for the quarter ended 31 Growth December 2008 (versus the same period last year) Actual LFL* By region United Kingdom & Ireland (21)% (22)% Asia Pacific (10)% (9)% Continental Europe & Rest of World 42% 21% Total (6)% (10)% By segment Permanent (20)% (23)% Temporary 7% 4% Total (6)% (10)% * LFL is like-for-like growth, which represents organic growth of continuingactivities at constant currency. There is the same number of trading days inthe quarter ended 31 December 2008 versus the same period last year. In the quarter ended 31 December 2008, Hays plc, the leading global specialistrecruitment group, saw a reduction in net fees of 6% (10% on a like-for-likebasis*) versus the same period last year. The difference between the headlineand like-for-like growth rate is due to the more favourable Euro exchange ratepartially offset by a less favourable Australian dollar exchange rate in thisperiod versus the same period last year. During the quarter, headcount reducedby 8%**, with most of the reduction in the United Kingdom & Ireland andAustralia & New Zealand.
Net fees from the permanent placement business decreased by 23%* as market conditions continued to deteriorate in our core markets. Net fees from the temporary placement business increased by 4%*, benefiting from another strong performance in Germany, which is our third largest business, and resilient performances in all other core markets.
The pace of the fall in net fees increased across the quarter, with an exit rate of around 15%* below the same period last year.
United Kingdom & Ireland
In the United Kingdom & Ireland, net fees fell by 22%* versus the same periodlast year. Accountancy & Finance net fees were lower than the same period lastyear due to falling client and candidate confidence across the whole market.Construction & Property had another difficult quarter reflecting very toughmarket conditions in the private sector. The Information Technology businessalso experienced a reduction in activity. Among the Other SpecialistRecruitment Activities there were mixed performances. City related activities,Legal and Human Resources were impacted by further reductions in demand levels,whilst Education and Healthcare continued to perform well. Overall, our publicsector business, which represented around 30% of the United Kingdom & Irelandnet fees in the quarter, achieved 10% growth as we continued to leverage ournationwide coverage and public sector expertise to take market share fromsmaller competitors.In view of the difficult market conditions and outlook, we will continue tofocus on cost control and productivity. We reduced the headcount in the UnitedKingdom & Ireland business by a further 10%** during the quarter which bringsthe total reduction to 20%** over the last 12 months.
Asia Pacific
In Asia Pacific, net fees decreased by 9%*. In Australia & New Zealand, therewere contrasting conditions between the permanent and temporary placementmarkets. Whilst the temporary placement market continued to achieve goodgrowth, the permanent placement market saw a marked deterioration in demandlevels. Resources & Mining and the newer specialisms were the best performingareas. In Asia, market conditions weakened as the global economic issuesstarted to impact recruitment.
Continental Europe & Rest of World ('RoW')
In Continental Europe & RoW, net fees increased by 21%*. This strong performance was led by continued excellent growth in Germany, whilst our newer businesses in Italy, United Arab Emirates, Brazil, Denmark and Hungary also achieved good growth. However, conditions weakened towards the end of the quarter in a number of our major countries in the region including France, Benelux, and Spain.
Share buy-back
The priorities for our free cash flow are to fund the Group's development, support a sustainable dividend and to buy back shares when appropriate. No shares were bought back during the quarter and we have no plans to buy back further shares in the current financial year (year to date buy back: 1.7 million shares at a cost of £1.4 million).
Cash flow and balance sheet
Cash generation was strong in the quarter benefiting from our highlydisciplined approach to working capital management. The balance sheet remainsstrong, and following the payment of the final dividend, net debt at the periodend was broadly in line with year end levels.
Management Changes
On 14 October, Tim Cook was appointed Managing Director of the United Kingdom &Ireland business taking over from Alistair Cox, Group Chief Executive, who hadbeen acting Managing Director since February 2008. Tim has held a number ofroles during his 21 year career at Hays, most recently as Managing Director ofthe Construction & Property business in the United Kingdom & Ireland.
Current Trading
Demand for permanent placements continues to fall at an increasing rate in theUK and Australia and has recently fallen in a number of other countries. Demandfor temporary placements has been resilient to date across most of the Group.We expect the usual seasonal weakening in January and the outlook for there-engagement of temporary workers after the Christmas holiday is less clearthan in previous years.Over the last year, we have reacted rapidly to deteriorating market conditionsby adjusting the cost base, focusing on cash generation, maximising ouropportunities in both the temporary and permanent placement markets andredirecting resources to increase market share in the more defensive sectors.The experience of our management teams around the world and the strength of ourbalance sheet positions us well to deal with these market conditions.* LFL is like-for-like growth, which represents organic growth of continuingactivities at constant currency. There is the same number of trading days inthe quarter ended 31 December 2008 versus the same period last year.
**changes to headcount refer to changes in consultant headcount.
EnquiriesHays plc Paul Venables Finance Director + 44 (0) 20 7383 2266Martin Abell Investor Relations + 44 (0) 20 7383 2266 Brunswick Gill Ackers + 44 (0) 20 7404 5959 Catherine Colloms Conference call
Paul Venables and Martin Abell of Hays plc will conduct a conference call for analysts and investors at 9:00am United Kingdom time on Thursday 8 January 2009. The dial in details are as follows:
Dial-in number +44 (0) 1452 561 263 Password Hays The call will be recorded and available for playback for seven days as follows: Replay dial-in number +44 (0) 1452 550 000 Access code 78453895# Reporting calendar
Interim results for 6 months ended 31 December 2008 26 February 2009 Trading update for quarter ending 31 March 2009
9 April 2009Trading update for quarter ending 30 June 2009 9 July 2009 Preliminary results for 12 months ending 30 June 2009 3 September 2009
Note to editorsHays plc is the leading global specialist recruitment group. It is marketleader in the UK and Australia, and one of the market leaders in ContinentalEurope. As at 30 June 2008, the Group employed 8,872 staff operating from 393offices in 27 countries across 17 specialisms. For the year ended 30 June 2008:- the Group had revenues of £2.5 billion, net fees of £786.8 million and operating profit before exceptional items of £253.8 million;- the Group placed around 80,000 candidates into permanent jobs and around 300,000 people into temporary assignments;- the temporary placement business represented 49% of net fees and the permanent placement business represented 51% of net fees.
Important notice
Certain statements in this announcement are forward looking statements. Bytheir nature, forward looking statements involve a number of risks,uncertainties or assumptions that could cause actual results or events todiffer materially from those expressed or implied by those statements. Forwardlooking statements regarding past trends or activities should not be taken asrepresentation that such trends or activities will continue in the future.Accordingly, undue reliance should not be placed on forward looking statements.
All information shown for the quarter ended 31 December 2008 is unaudited.
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