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Hays delivers first special dividend as full year profits rise despite Brexit-hit UK jobs market

Published: 07:51 31 Aug 2017 BST

Hays
Hays says 'conditions remain good' in most of its markets in the current financial year

Recruiter Hays PLC (LON:HAS) more than doubled its full year dividend as it strengthened its cash position and delivered a slight increase in profits despite a slump in the Brexit-hit UK jobs market.

Hays raised its final dividend by 14% to 2.26p per share and recommended its first special dividend of 4.25p each as it ended the year with net cash of £111.6mln, compared to £36.8mln last year. This resulted in a total dividend pay-out of £108.3mln, or 7.47p per share, up from £41.7mln, or 2.9p, the previous year. 

READ: Hays sees full year profits ahead of market forecasts as the recruiter shrugs off Brexit uncertainty

Operating profit in the year to 30 June rose to £211.5mln from £181.0mln the prior year, marking a 17% rise at actual exchange rates, boosted by a weaker pound against currencies in its international markets. On a like-for-like basis, operating profit edged up 1%.

Net fees increased to £954.6mln from £810.3mln, an 18% rise on a reported basis and a 6% gain on a like-for-like basis, the company said in a statement.

“Our International businesses delivered record levels of fees and profit which, together with exchange rate gains, drove overall group operating profit to over £200mln for the first time since 2008,” said chief executive Alistair Cox.

“As a result of our strong financial and cash performance and a confident outlook, we have proposed the payment of the group’s first special dividend, of £61.6m. This supplements a proposed core dividend which has itself increased by 11% meaning the group’s total dividend pay-out has more than doubled year-on-year.”

Growth in international divisions mitigate weak UK jobs market

Growth was driven by its businesses in Continental Europe and the rest of the world where like-for-like net fees rose 12% and like-for-like operating profit climbed 7%, boosted by robust performances in Germany and France.

The Asia Pacific arm saw net fees grow like-for-like 9% and operating profit edged up a like-for-like 10%.

However, conditions in the UK and Ireland division were “challenging” after business confidence took a hit following last year’s Brexit vote. Net fees fell 7% and operating profit dropped 21%, both on a like-for-like basis.

The first half of the year saw the biggest decline in net fees and while there was a modest improvement in the second half, client confidence remained subdued.

In response to the changing market conditions, Hays cut costs and reduced its consultant headcount by 4%.

Headcount to rise in first quarter

In current trading, Hay said it has seen further signs of modest improvement in the UK private sector jobs market but the public sector remains tough.

Hays expects headcount in the UK and Ireland to increase modestly in the first quarter, including its normal seasonal graduate intake.

The company also sees headcount rising in Continental Europe and the rest of the world division in the first quarter, particularly in Germany, France and the US, as growth in these markets remains strong.

In the Asia Pacific, Hays expects headcount to rise between 2-4% in the first quarter, as it continues to see strong jobs activity in Australia and good growth in Asia.

“As we enter our new year, conditions remain good in the vast majority of our markets and we see many clear opportunities to grow,” said Cox.

“Our diverse and balanced global business, together with our highly experienced management teams and our strong balance sheet means we are well positioned to capitalise on these growth opportunities while maximising earnings and cash along the way.”

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