Mirroring a trading update from sector peer PageGroup yesterday, recruitment firm Hays Group PLC (LON:HAS) had a strong finish to 2016, except in the UK & Ireland.
On a like-for-like (LFL) basis, the group’s net fees in the final three months of last year were up 2% year-on-year, despite the UK & Ireland posting a 10% decline.
Net fees in Asia Pacific were up 7% on a LFL basis, while Continental Europe and the Rest of the World saw growth of 8%.
Net fees in the UK & Ireland were more or less stable quarter-on-quarter.
Conditions in public sector markets remain tough, Hays revealed, with net fees 13% lower this year than last. The private sector business was down 9% year-on-year, though there were early signs of improvement towards the end of the quarter.
The recruiter’s temping business outperformed the permanent staffing side of the business, notching up LFL year-on-year growth 3% versus growth of 1% for the permanent staffing business.
The group continues to chuck off cash, with net cash at the end of the period rising to £48mln from £20.2mln at the end of September.
“Performance across Continental Europe was broad-based, as nine countries delivered double-digit growth and we saw good performances in both Germany and France, our two largest businesses in Europe,” said Alistair Cox, chief executive of Hays.
“In Australia market confidence in the private sector continued to improve and our growth accelerated significantly,” he added.
Liberum Capital Markets said earnings were in line with expectations.
“Relative to our forecasts the main area of outperformance was in Asia Pacific where a strong performance in Australia helped deliver 7% growth. We would also note that the exit rate for the quarter was 4%, suggesting an improving trend over the course of the period – a trend seen across most regions including the UK,” the broker said.
“Cash conversion during the quarter was better than expected and as a result the company ended the period with a net cash position of £48m, significantly ahead of our expectations and higher than the 1Q17 level (£20m). We see Hays’s discipline and geographic diversity as a source of relative strength and believe it is well placed to benefit from further weakness in sterling and an improvement in recruitment activity,” the broker added.
Shares in Hays were unchanged in mid-morning trading in a gently falling market.