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Hays to report another quarter of growth, wrapping up positive week for recruiters

The day ahead includes trading updates from Hays and Experian
Hays
Hays is expected to report a 11% increase in like-for-like gross profit for the final quarter

Hays plc (LON:HAS) is expected to cap off a positive week for recruiters on Friday following well-received trading updates from PageGroup PLC (LON:PAGE) and Robert Walters (LON:RWA).

The recruitment firm will report its fourth quarter results and analysts predict a strong end to the year, driven by growth in Germany.

UBS said it sees the company posting an 11% increase in like-for-like gross profit for the period, accelerating from the 10% rise reported in the previous quarter.

Like the rest of the sector, the UK job market has been its Achilles' heel as employers exercise more caution on hiring staff amid Brexit uncertainty.

In the third quarter, Hays saw like-for-like gross profit drop 2% in the UK and Ireland division. The unit accounted for about 24% of the total.  

READ: Hays reports third quarter gross profit growth in subdued UK jobs market

The company’s saving grace was Germany, which represented 27% of total net fees in the third quarter and delivered like-for-like growth of 16%.

For the fourth quarter, UBS expects Germany to pick-up to a like-for-like gross profit gain of 19% while it sees the UK remaining broadly flat.

“The UK is likely to remain subdued but should see an unwind of the Easter impact and remain flattish,” UBS said.  

“We expect Hays to indicate comfort with current consensus expectations at c£238m EBITA for FY18 which should close off year 1 of Hays' 5 year plan.

“The focus will shift onto FY19 where we see greater operating leverage.”

On Wednesday, PageGroup raised its 2018 guidance after reporting a record 14.5% increase in second quarter gross profit to £208.2mln. Robert Walters on Tuesday said gross profit jumped 15.8% in the second quarter.

Experian trading update

Away from the recruitment sector, Experian is also expected to deliver a positive trading statement on Friday.

In a preview of the Experian update, Graham Spooner, investment research analyst at The Share Centre, commented: “The share price hit an all-time high in June on expectations that the group will continue to make steady progress and the fact that they have a dominant position in its market place.”

He added: “Areas to concentrate on will be emerging market performance, its key Credit Services and Decision Analytics businesses, effects of FX movements and the UK and Ireland business which has been under pressure.”

Experian will likely be hoping to beat the forecasts from analysts at Deutsche Bank, who downgraded the stock to ‘hold’ from ‘buy’ in June in anticipation of slower growth in the second half of its financial year.

Significant announcements expected:

Trading updates: Experian PLC (LON:EXPN), Hays plc (LON:HAS), DCC Plc (LON:DCC), Ashmore groupPLC (LON:ASHM), Workspace Group plc (LON:WKP), DP Eurasia NV (LON:DPEU)

Economic data: RICS UK house price survey; US import and export prices; University of Michigan preliminary consumer confidence index


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