Recruitment firm Hays plc (LON:HAS) has achieved record quarterly net fees, boosted by growth in Europe and a modest improvement in the UK.
The company reported a 10% like-for-like increase in total net fees in the first quarter ended 30 September 2017, including an 8% rise in temporary placements and a 13% gain in permanent placements.
READ: UBS ups stance for Hays to ‘buy’ from ‘neutral’ as it looks for a ‘margin break-out ahead
Continental Europe and the rest of the world – the group’s largest division representing 50% of total net fees—saw net fees rise 13% on a like-for-like basis despite the negative impact of one less trading day in Germany.
The UK & Ireland unit delivered a 1% like-for-like gain in net fees, marking an improvement on the 5% drop reported in the fourth quarter.
The improvement was driven by 4% growth in the private sector, offsetting a 9% decline in the public sector. The division accounts for 25% of total net fees.
The UK jobs market has taken a hit since the Brexit vote knocked business confidence.
Hays chief executive Alistair Cox said market conditions in the UK remain “stable overall” despite the impact of Brexit uncertainty.
In the Asia Pacific region, net fees edged up a like-for-like 14%, led by a 15% increase in Australia and an 18% rise in Asia.
The group ended the period with a net cash position of £60mln, down from £111.6mln on June 30 but in line with the company’s expectations.
Hays confident on outlook
“Looking ahead, conditions remain good in the vast majority of our international markets,” 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 the many clear growth opportunities we currently see across the vast majority of our markets, while maximising earnings and cash along the way."
Shares in Hays rose 0.84% to 191.60p in morning trading.
Liberum sees double-digit earnings growth in 2018
Liberum reiterated a 'buy' rating and target price of 195p, saying it continues to see Hays as its preferred large cap recruiter given its "greater discipline diversity and exposure to the contract market".
"With a positive outlook for a number of the group’s key regions, including Europe and Australia, we believe that the risks to underlying expectations lie to the upside," Liberum said.
"As a result we see the group as well positioned to deliver double-digit earnings growth in FY2018 (fiscal year 2018). This combined with strong cash conversion should support the case for the announcement of special dividend in FY18."