Germany lift helps recruiter Hays beat forecasts
LONDON (Reuters) - More relaxed labor laws for temporary workers in Germany helped push British recruitment firm Hays (HAYS.L) to a better than expected first quarter, easing the gloom in some other key markets.
Fees from Hays's IT-focused German market grew a record 25 percent on a like-for-like basis up to September 30, highlighting the growing importance to Hays of the euro zone's largest economy, where group headcount has grown sixfold since 2005.
At 1145 GMT, Hays's shares, which have fallen 16 percent over the past six months, were up 6.7 percent at 80.2 pence.
"This is an encouraging update from Hays. Hays is clearly outperforming Michael Page which reported a 6.5 percent decline in net fee income over the same period," analysts at Seymour Pierce said, moving from 'hold' to 'buy' on the stock.
Germany now accounts for a fifth of group profit, with the UK representing around 30 percent.
In the Asia Pacific region, which contributes 32 percent of group fees, a contraction in Australia and New Zealand followed a slowdown in demand for natural resources in China.
Top global miner BHP Billiton announced job cuts on Tuesday.
Finance director Paul Venables said the company had benefited from flexible employment laws introduced in Germany in 2005, that allow firms to take on workers with rolling contracts.
"The UK has gotten more restrictive over the last few years, while Germany has gotten more liberal... in sheer scale it will definitely overtake the UK within the next five years," he said.
Hays posted a 1 percent fall in overall gross profit, beating analyst expectations but reflecting the uncertain nature of the jobs market across many parts of the world.
The temporary jobs market, which saw a record rise in the UK in September and represents more than half of Hay's profits, grew 6 percent, compared with a 9 percent fall in permanent placements.
Rival recruiter Michael Page, which derives three-quarters of its profit from the permanent recruitment market, issued a profit warning on Monday, blaming a sharp deterioration in euro zone markets.
(Editing by Neil Maidment and Mike Nesbit)