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UPDATE 1-UK recruiter Hays shares at seven-year high after upbeat outlook
April 10, 2014 / 11:16 AM / in 4 years

UPDATE 1-UK recruiter Hays shares at seven-year high after upbeat outlook

* FY op profit seen at 141 mln stg, top of forecast range

* Q3 net fees up over 10 pct in 22 out of 33 countries

* Net fees in UK/Ireland up 14 pct, fastest in over 6 years

* Shares up 8 pence or 5.7 pct, hit highest since Sept 2007 (Add CFO and analyst comments)

By Li-mei Hoang

LONDON, April 10 (Reuters) - British recruiting company Hays Plc forecast earnings at the top end of the range of forecasts and saw four more years of strong growth, reflecting rising staff demand as economies pick up and sending its shares to a near seven-year high.

The jobs market is highly sensitive to economic prospects and comments from agencies like Hays have grown increasingly positive this year as key markets gain pace.

The trend in Britain was highlighted earlier this week when figures from the Recruitment and Employment Confederation, which represents companies in the sector, said British employers are raising the salaries they offer to new permanent staff at the fastest rate in nearly seven years as they struggle to fill vacancies.

“It’s momentum ... the world feels a much better place than it did three to six months ago, certainly better than it did 12 months ago and it feels like it’s got some way to go,” Chief Financial Officer Paul Venables told Reuters in a phone interview on Thursday.

Hays shares were up 8.2 pence or 5.7 percent by 1012 GMT, after rising as high as 157.5p, their highest since September 2007.

Hays, which places skilled staff in areas such as finance, IT and property and whose rivals include Michael Page International Plc and Robert Walters Plc, said in a statement it had seen a rapid acceleration of growth in its third quarter through March in its key markets.

It said 22 out of 33 countries reported a rise of more than 10 percent in net fees, driven by an upturn in people becoming confident enough to look to move jobs and a pick-up in smaller companies wanting to increase their headcount.

Venables said even countries like Spain and Portugal, which have suffered deep recessions in recent years, reported net fee growth of 72 percent collectively.

STRONG GROWTH

Net fees in Britain and Ireland grew 14 percent in the third quarter, the fastest pace in more than six years, Hays said, driven by a rise in permanent job placements which were up 25 percent for the second consecutive quarter.

Hays said it also saw strong growth in Germany where net fees rose to 12 percent from 5 percent in the previous quarter.

The company said it expected operating profit in the year through June 2014 to reach 141 million pounds ($236 million), which it said was the top end of the range of analyst forecasts, and said it expects to see a further four years of strong growth across its markets.

“The sort of growth that we have seen in this quarter is about 8 percent, I’d expect to be delivering several more quarterly performances which are going to be that sort of growth level,” Venables said.

“I think we have got four years of strong growth to come,” he added.

One negative point was a 12 percent drop in net fees in Australia, which has suffered from a slowdown in the mining sector, but Hays said it saw broad-based stability in activity levels in the quarter.

The group’s own consultant headcount was also up 1 percent during its third quarter and increased by 2 percent year-on-year.

Analyst Paul Jones at brokerage Panmure raised his share price target to 151p from 124p following the statement, noting the company’s impressive UK growth and further evidence of a pick-up in activity levels and profitability.

“We believe recruitment stocks could now deliver increasing levels of profitability as activity and productivity levels improve, and with increasing client confidence the outlook remains positive,” Jones added. (Editing by Paul Sandle and David Holmes)

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