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UPDATE 2-Hays results held back by UK hiring weakness post Brexit vote
February 22, 2017 / 8:08 AM / 9 months ago

UPDATE 2-Hays results held back by UK hiring weakness post Brexit vote

* UK, Ireland operating profit 18.2 mln pounds

* Unit’s constant currencies net fees down 10 pct

* Group profit rises 16 pct to 100.1 mln pounds (Adds CFO, analyst comments, details)

By Esha Vaish

Feb 22 (Reuters) - British recruitment company Hays reported a 28 percent fall in first-half UK and Ireland operating profit, dented by worries over the country’s vote to leave the European Union.

The company, which places workers in areas such as finance and IT, said although the UK market had stabilised after stumbling in the immediate aftermath of the June 23 referendum, the recovery was gradual. “It’s not a roaring back improvement in the market, but it is a continued gradual improvement, led by the larger corporates, primarily outside of London,” Finance Director Paul Venables told Reuters. “London, which has a much greater skew towards the banking market, still remains difficult,” he said. Venables said some banks were putting corporate structures in place in Europe to ensure they had licenses to trade in the bloc after Brexit, although few jobs had moved. “We’ve seen very little of that so far. The idea of large numbers of jobs going from London to (European cities) seem a bit stretched,” Venables said. Operating profit at its UK and Ireland business fell 28 percent to 18.2 million pounds ($22.65 million) and constant currencies net fees were down 10 percent in the six months to the end of Dec. 31. The business accounts for about a quarter of its net fees. The company, which has operations in 33 countries, posted record net fees growth in Germany, its largest market, and a “significant” acceleration in activity in Australia, boosting group profit by 16 percent to 100.1 million pounds.

Two analysts said profits were slightly below expectations, as a lower conversion rate at its UK business dragged Hays’ group rate down 20 basis points to 21.5 percent, partly eclipsing a 3 percent net fees rise at constant currencies to 465.5 million pounds.

Hays’ shares, which have gained 21 percent since the vote, were down 4.8 percent at 149.9 pence at 1124 GMT.

”Whilst trading remains robust and there is the potential for special dividends going forward, the stock has clearly been strong and we see it as fairly valued on mid-cycle scenarios, RBC analyst Andrew Brooke wrote. Staffing firms such as Hays, PageGroup, SThree and Robert Walters are seen as gauges of wider economic health because people tend to switch jobs more often when confidence rises. Their results over the past year have been held back by the uncertainty in Britain.

PageGroup has warned that job market confidence in the UK had deteriorated further as Brexit caused finance firms and retailers to hold off from hiring, while SThree said it was seeing fewer British jobs coming on to the market and companies hiring temporary staff for slightly shorter durations. ($1 = 0.8037 pounds) (Reporting by Esha Vaish in Bengaluru; editing by David Clarke and Susan Thomas)

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