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Hays sees lower confidence in UK and Germany, offset by US and China

The careers company said like-for-like sales were flat and a weakening Sterling against the Euro remains a "material sensitivity"

Hays PLC - recruitment

Hays PLC (LON:HAYS) has posted flat revenues and warned of lower business and candidate confidence in Britain and Germany, its two largest markets.

The firm, which specialises in permanent and temporary recruitment, said that in the three months to the end of September, net fees in the UK slid 4%, dragged down by a wearying private sector which reported a steep 7% drop.

It comes as more grim news from the recruitment sector, after PageGroup and Robert Walters both slashed their full-year profit expectations last week, with Brexit-related uncertainty hitting candidates and companies.

Overall fees across Hays’ regions were up 1%, but the careers company said that the apparent growth was due to a weakening of sterling against the euro increasing reported fees, as like-for-like sales in the period were flat.

Growth in the FTSE 250 firm’s largest market of Germany was also flat, with Hays citing “broad signs of reduced business confidence and increased client cost control” that was especially evident in manufacturing and the car industry, which has slipped into recession in recent months.

Chief executive Alistair Cox said that “despite tougher global macroeconomic conditions and reduced business confidence” Hays had delivered a “solid quarter of stable net fees” with USA up 12% and China not far behind with 7%.

Looking to the future, the recruiter said that “exchange rate movements remain a material sensitivity to the Group's reported profitability” but said that it remained confident it could weather a storm due to its strong market position, experienced management, and financial strength.

Russ Mould, investment director at AJ Bell, said that the market's "rock bottom" expectations for the recruiter "explains why the shares are rising strongly despite what looks like a fairly average trading update".

Mould added: "It is no surprise to see that here, net fee income, a key metric for recruitment firms, is retreating", with fees from Germany hit by manufacturing slump and the UK "under particular strain as businesses put hiring on hold while they await clarity on the Brexit situation".

Meanwhile, broker Liberum cut its target price for the recruiter to 160p from 185p but maintained its 'Buy' rating, saying that Hays' investment in growth markets such as Asia and the Americas is a "strong indicator of confidence in longer term prospects".

Hays shares rose 6% to 151.9p on Tuesday morning, up 6%.

Quick facts: Hays PLC

Price: 95.8 GBX

Market: LSE
Market Cap: £1.41 billion

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