TIDMHAS
RNS Number : 8531P
Hays PLC
12 October 2023
QUARTERLY
UPDATE
FOR THE THREE MONTHSED
30 SEPTEMBER 2023
12 October 2023
Financial summary
Growth in net fees for the quarter ended 30 September 2023 (Q1
FY24)
(versus the same period last year) Growth
---------------
Actual LFL
By division:
Germany 7% 7%
United Kingdom & Ireland (UK&I) (11)% (11)%
Australia & New Zealand (ANZ) (27)% (17)%
Rest of World (RoW) (13)% (11)%
------------------------------------ ------- ------
Total (9)% (7)%
------------------------------------ ------- ------
By segment:
Temporary (2)% 0%
Permanent (18)% (15)%
------------------------------------ ------- ------
Total (9)% (7)%
------------------------------------- ------- ------
Note: unless otherwise stated, all growth rates discussed in
this statement are LFL (like-for-like) fees, representing
year-on-year organic growth of continuing operations at constant
currency.
Highlights
-- Fees down 7%, in-line with our expectations, versus a record quarter
in the prior year . Resilient performance in Temp, with fees flat
and volumes broadly stable through the quarter . Perm down 15%,
with tough conditions and increased time-to-hire . The Group's
September fee exit rate was in-line with Q1 overall at (7)%
-- Our key strategic markets continue to face skill shortages and
Group fees continued to be supported by wage inflation and positive
pricing
-- Germany: fees up 7%, or 8% on a working day-adjusted (WDA) basis.
Temp & Contracting up 8% (up 10% WDA), driven by modest volume
growth and positive pricing. Perm up 2%
-- UK & Ireland (UK&I): fees down 11%. Temp fees down 8%, with Perm
down 14%. Public sector fees grew by 4%, with the Private sector
down 16%
-- Australia & New Zealand (ANZ): fees down 17%, with Temp down
13% and Perm down 24%. Public sector fees decreased 11%, with
the Private sector down 20%
-- Rest of World (RoW): fees down 11%. EMEA ex-Germany fees were
flat, although Asia decreased by 17%, with China again challenging.
The Americas was also tough, down 28%
-- Consultant headcount decreased by 2% in the quarter and by 9%
YoY, as we focused on driving productivity which remained at good
levels overall
-- Strong balance sheet with net cash of c.GBP75 million (30 June
2023: GBP135.6 million), in line with our expectations
Commenting on the Group's performance, Dirk Hahn, Chief
Executive, said:
"I am deeply proud to have been appointed Chief Executive and I
look forward to driving our business forward, with the help of our
highly experienced management teams worldwide. We are market
leaders in highly attractive structural growth markets, including
Germany, Enterprise clients and Technology, and we have a clear
strategy going forward. My focus is on excellence of execution,
including driving consultant productivity and increasing Group
profitability.
"FY24 has begun in line with our expectations. Temp &
Contracting, our largest business and a key strategic focus,
produced a resilient performance, although Perm markets remain more
difficult, with increased time-to-hire. Fee growth was led by our
largest market of Germany, with EMEA fees flat, while ANZ, Asia and
the Americas remained the most challenging markets. Our key markets
remain characterised by skill shortages and continue to be
positively impacted by wage inflation. We have a strong balance
sheet and flexible business model and are well-positioned to adapt
to near-term market conditions, while continuing to target
structural growth opportunities and deliver shareholder value."
Group
Q1 trading overview
Group fees declined by 7% year-on-year on a like-for-like basis,
versus a record quarter in the prior year, and reflecting increased
time-to-hire in Perm. On an actual basis, net fees decreased by 9%,
with a weakening of the Australian dollar versus sterling in
particular decreasing Group fees. The Group's year-on-year fee
decline was consistent through the quarter, and our fee decline
exit rate was (7)%.
Temp and Contracting (58% of Group fees) was flat YoY%, driven
by our actions to increase fee margins and our focus on higher
value markets, together with the positive effects of wage
inflation. Temp volumes were broadly stable through the quarter,
although decreased by 6% year-on-year, with modest growth in
Germany and EMEA offset by decreases in ANZ and UK&I. Fees in
Perm (42% of Group fees) decreased by 15%, driven by volumes down
26% as job flows decreased and hiring processes extended. This was
partially offset by an increase in our Group average Perm fee, up
11%. Fees in the Private sector (83% of Group fees) decreased by
9%, with the Public sector up 4%.
Our long-term strategy is to position our businesses in the most
attractive structural growth sectors. Fees in our largest global
specialism of Technology (25% of Group) declined by 7%, versus a
record prior year performance. Consistent with recent quarters,
Technology Temp significantly outperformed Perm. Our second largest
specialism, Accountancy & Finance, decreased by 4%, with a
stronger performance in our Senior Finance practice. Engineering,
our third largest specialism, grew by 10%, although Construction
& Property decreased by 14%. Direct outsourcing fees in
Enterprise clients decreased by 6%, although we continue to have a
good pipeline of opportunities.
Group headcount, FX and H1 FY24 working days
Group consultant headcount decreased by 2% in the quarter and
decreased by 9% year-on-year, as we managed our overall capacity in
line with market conditions. We remain firmly focused on driving
consultant productivity, which is at good overall levels, despite
more difficult markets, particularly in Perm.
The strengthening of sterling versus our main trading currencies
of the euro and Australian dollar remains a headwind to Group
operating profit in FY24. If we re-translate FY23 operating profit
of GBP197.0 million using 9 October exchange rates (AUD1.9133 and
EUR1.1580), operating profit would decrease by c.GBP4 million, with
the majority of the YoY negative currency impact in H1 FY24. Also,
Germany has two fewer working days in the first half of FY24, which
will negatively impact fees and profit in our Temp &
Contracting businesses by c.GBP3.5 million in H1.
Outlook
Overall, FY24 has begun in line with our expectations, and we
continue to benefit from the positive effects of mix and margins.
Volumes remain broadly stable overall in Temp and Contracting, with
modestly lower numbers of new assignments offset by greater
contract extensions. In Perm, we continue to see lower client and
candidate confidence, with increased time-to-hire.
As a reminder, given that Group net fees will decline
year-on-year in H1 FY24, in part due to the FX and working day
impacts noted above, we continue to expect conversion rate and
operating profit will also decline, as we protect key strategic
investments to benefit from future recovery and structural growth
opportunities.
Germany (32% of net fees)
Germany delivered 7% fee growth, or up 8% on a working
day-adjusted (WDA) basis.
Our largest specialism of Technology, 33% of Germany fees,
increased by 1%, with our second largest, Engineering, up 17%.
Accountancy & Finance grew by 4%, with HR up 7%. Private sector
fees (85% of Germany) increased by 4%, with the Public sector up an
excellent 21%.
Contracting (57% of Germany fees) delivered solid growth, with
fees up 6% (8% WDA). This was driven by 1% growth in contractor
volumes and 7% from higher margins, partially offset by a 2%
reduction from one fewer working day YoY.
Fees in Temp (26% of Germany fees), where we employ temporary
workers as required under German law, increased by 12% (14% WDA).
This was driven by 5% growth in Temp volumes, 9% from higher
margins and average Temp hours worked, partially offset by a 2%
reduction from one fewer working day YoY.
Perm, which represented 17% of Germany fees, increased by
2%.
Consultant headcount increased 1% in the quarter and by 2%
year-on-year.
United Kingdom & Ireland (21% of net fees)
Net fees in the United Kingdom & Ireland decreased by 11%.
Temp (54% of UK&I fees) fees decreased by 8%, with Perm down
14%. The Private sector (69% of UK&I fees) declined by 16%,
with the Public sector up 4%.
Most regions traded broadly in line with the overall UK&I
business, including our largest region of London which decreased by
14%. In Ireland, our business decreased by 10%.
At the specialism level, our two largest UK&I businesses,
Accountancy & Finance and Technology, decreased by 6% and 20%
respectively. Education increased by 7%, although Construction
& Property decreased by 10%.
Consultant headcount decreased by 1% in the quarter and by 13%
year-on-year.
Australia & New Zealand (13% of net fees)
Net fees in Australia & New Zealand fell by 17%. Temp, 62%
of ANZ, decreased by 13%, with Perm down 24%. Private sector fees,
64% of ANZ, decreased by 20%, with the Public sector down 11%,
impacted by tough market conditions, particularly in Temp.
Australia net fees decreased by 17%. Our largest regions of New
South Wales and Victoria, which together represented 51% of
Australia fees, decreased by 22% and 20% respectively. Queensland
and Western Australia fell 10% and 8%, with ACT down 20%.
At the ANZ specialism level, Construction & Property (19% of
ANZ fees) decreased by 24%. Technology, our second largest
specialism, fell by 21%, while Accountancy & Finance and HR
decreased by 12% and 9% respectively.
New Zealand, 9% of ANZ net fees, decreased by 17%.
ANZ consultant headcount decreased by 6% in the quarter and by
14% year-on-year.
Rest of World (34% of net fees)
Fees in our Rest of World division, comprising 28 countries,
decreased by 11%. Perm, which represented 63% of RoW net fees,
decreased by 17%, with Temp fees up 4%.
EMEA ex-Germany (63% of RoW) fees were flat. France, our largest
RoW country, grew by 6%, with the UAE and Italy up 25% and 10%
respectively. Belgium and Switzerland increased by 2% and 3%
respectively, although fees in Poland declined by 21%.
The Americas (21% of RoW) fees decreased by 28%, with conditions
difficult through the quarter, particularly in Perm. Canada and USA
were tough, down 31% and 27% respectively, as was Latam, down
29%.
Asia (16% of RoW) fees decreased by 17%. Japan decreased by 4%,
with Malaysia down 15%. China decreased by 25%, with no signs of
any material post-pandemic recovery in Mainland China, which
continued to underperform Hong Kong.
RoW consultant headcount decreased by 2% in the quarter and by
10% year-on-year.
Cash flow and balance sheet
Our balance sheet remains strong with net cash at 30 September
2023 of c.GBP75 million (30 June 2023: GBP135.6 million) , in line
with our expectations. On 7 September 2023, we announced a Treasury
Share P rogramme to purchase up to 12 million ordinary shares,
which will be held to satisfy employee share-based award
obligations. During the quarter we purchased 3.4 million shares
(c.GBP3.6 million) under this programme.
Enquiries
Hays plc
James Hilton Group Finance Director +44 (0) 203 978
David Phillips Head of Investor Relations 2520
& ESG +44 (0) 333 010
FGS Global 7122
Guy Lamming
Anjali Unnikrishnan
hays@fgsglobal.com
Conference call
James Hilton and David Phillips will conduct a conference call
for analysts and investors at 8:00am United Kingdom time on 12
October 2023. Participants are invited to register via the URL link
below:
https://register.vevent.com/register/BIcf8b82d7342747c3a2f30185df9bfb9e
Once registered, you will receive a confirmation email, with the
details of the call and a personal login link and PIN which will
place you directly into the call, without the need to speak to an
operator. The call will be recorded and will also be available for
playback via the results centre on our investor website .
Reporting calendar
Trading update for the quarter ending 31 December 2023
(Q2 FY24) 18 January 2024
Half-year results for the six months ending 31 December
2023 (H1 FY24) 22 February 2024
Trading update for the quarter ending 31 March 2024
(Q3 FY24) 18 April 2024
Hays Group overview
As at 30 September 2023, Hays had c.13,000 employees in 251
offices in 33 countries. In many of our global markets, the vast
majority of professional and skilled recruitment is still done
in-house, with minimal outsourcing to recruitment agencies, which
presents substantial long-term structural growth opportunities.
This has been a key driver of the diversification and
internationalisation of the Group, with the International business
representing 79% of the Group's net fees in Q1 FY24, compared with
25% in FY05.
Our consultants work in a broad range of industries covering
recruitment in 21 professional and skilled specialisms. In Q1 FY24
our four largest specialisms of Technology (25% of Group net fees),
Accountancy & Finance (15%), Engineering (11%) and Construction
& Property (10%) and collectively represented 61% of Group
fees.
In addition to our international and sectoral diversification,
in Q1 FY24 the Group's net fees were generated 58% from temporary
and 42% from permanent placement markets, and this balance gives
our business model relative resilience. This well-diversified
business model continues to be a key driver of the Group's
financial performance.
Purpose, Net Zero, Equity and our Communities
Our purpose is to benefit society by investing in lifelong
partnerships that empower people and organisations to succeed,
creating opportunities and improving lives. Becoming lifelong
partners to millions of people and thousands of organisations also
helps to make our business sustainable. Our core company value is
that we should always strive to 'do the right thing'. Linked to
this and our commitment to Environmental, Social & Governance
(ESG) matters, Hays has shaped its Sustainability Framework around
the United Nations Sustainable Development Goals (UNSDG's), and
further details can be found on pages 54-67 of our FY23 Annual
report .
Cautionary statement
This Quarterly Update (the "Report") has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the UK Financial Conduct Authority and is not audited. No
representation or warranty, express or implied, is or will be made
in relation to the accuracy, fairness or completeness of the
information or opinions contained in this Report. Statements in
this Report reflect the knowledge and information available at the
time of its preparation. Certain statements included or
incorporated by reference within this Report may constitute
"forward-looking statements" in respect of the Group's operations,
performance, prospects and/or financial condition. By their nature,
forward-looking statements involve a number of risks, uncertainties
and assumptions and actual results or events may differ materially
from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be
met and reliance shall not be placed on any forward-looking
statement. Additionally, forward-looking statements regarding past
trends or activities shall not be taken as a representation that
such trends or activities will continue in the future. The
information contained in this Report is subject to change without
notice and no responsibility or obligation is accepted to update or
revise any forward-looking statement resulting from new
information, future events or otherwise. Nothing in this Report
shall be construed as a profit forecast. This Report does not
constitute or form part of any offer or invitation to sell, or any
solicitation of any offer to purchase or subscribe for any shares
in the Company, nor shall it or any part of it or the fact of its
distribution form the basis of, or be relied on in connection with,
any contract or commitment or investment decisions relating
thereto, nor does it constitute a recommendation regarding the
shares of the Company or any invitation or inducement to engage in
investment activity under section 21 of the Financial Services and
Markets Act 2000. Past performance cannot be relied upon as a guide
to future performance. Liability arising from anything in this
Report shall be governed by English Law, and neither the Company
nor any of its affiliates, advisors or representatives shall have
any liability whatsoever (in negligence or otherwise) for any loss
howsoever arising from any use of this Report or its contents or
otherwise arising in connection with this Report. Nothing in this
Report shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
LEI code: 213800QC8AWD4BO8TH08
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