TIDMHAS
RNS Number : 0170Z
Hays PLC
09 January 2024
QUARTERLY
UPDATE
FOR THE THREE MONTHSED
31 DECEMBER 2023
9 January 2024
Financial summary
Growth in net fees for the quarter ended 31 December 2023 (Q2
FY24)
(versus the same period last year) Growth
---------------
Actual LFL
By division:
Germany 0% 0%
United Kingdom & Ireland (UK&I) (17)% (17)%
Australia & New Zealand (ANZ) (24)% (20)%
Rest of World (RoW) (13)% (11)%
------------------------------------ ------- ------
Total (12)% (10)%
------------------------------------ ------- ------
By segment:
Temporary (7)% (5)%
Permanent (18)% (17)%
------------------------------------ ------- ------
Total (12)% (10)%
------------------------------------- ------- ------
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. WDA = working-day adjusted
Highlights
-- Group fees down 10%, impacted by a more difficult December, where fees fell by 15% (minus
13% WDA). As a result of this slowdown at the end of the quarter, we now expect H1 pre-exceptional
operating profit of c.GBP60 million, below current market consensus expectations ( [1] ()
-- Germany: flat fees, or up 2% on a WDA basis. Temp & Contracting flat (up 2% WDA), with volumes
down 1%, impacted by lower new sales YoY through the quarter. Perm fees flat YoY
-- UK & Ireland: fees down 17%, with Temp down 13% and Perm slowing through the quarter, down
21%
-- Australia & New Zealand: fees down 20%, with Temp down 16% and Perm slowing through the quarter,
down 27%
-- Rest of World: fees down 11%. EMEA ex-Germany fees declined by 5%, with Asia down 11%. The
Americas continued to be tough, down 25%
-- Consultant headcount decreased by 5% in the quarter and by 12% YoY. Overall, our actions to
reduce costs in H1 24 will deliver c.GBP30 million in annualised savings, with further material
savings expected in H2. As a result, we expect to incur an exceptional restructuring charge
in H1 FY24 of c.GBP12 million
-- Strong balance sheet with net cash of c.GBP60 million (30 Sept 2023: c.GBP75 million), in
l ine with our expectations, and after paying GBP68.3 million in core and special dividends
in the quarter
Commenting on the Group's performance, Dirk Hahn, Chief
Executive, said:
"Overall market conditions became increasingly challenging
through the quarter, including a clear slowdown in most markets in
December, notably in our Perm businesses as client and candidate
decision-making slowed. Temp volumes remained broadly stable
sequentially through the quarter, but declined YoY as we did not
see our normal seasonal step-up in worker volumes. As a result, we
expect operating profit in our first half to be c.GBP60 million,
despite our ongoing actions to reduce costs.
Given increased uncertainties and reduced client and candidate
confidence, our New Year 'return to work' is particularly
important, and we are closely monitoring activity levels. It is too
early to say if December's weakness reflects a sustained market
slowdown or some placement deferrals, however, we expect near-term
market conditions to remain challenging. Consequently, we
accelerated our cost reduction and efficiency programmes, while
focusing on increased operational performance and rigour. Looking
ahead, our strategy is increasingly focused on enhancing our
leading positions in the most attractive and skill-short markets
globally, including Germany, non-Perm and Enterprise clients. I am
confident our current initiatives will materially benefit
profitability once our end markets stabilise."
Group
Q2 trading overview
Group fees declined by 10% year-on-year on a like-for-like
basis, particularly impacted by a slowdown in December where fees
fell by 15%, or 13% on a WDA basis. The Group's net fee exit rate
in Temp was minus 5% WDA, and was minus 25% in Perm. On an actual
basis, net fees decreased by 12% in the quarter, with a weakening
of the Australian and US dollar versus sterling decreasing Group
fees.
Temp and Contracting (59% of Group fees) declined by 5% (down 4%
WDA), against a challenging YoY growth comparative. Whilst overall
volumes remained broadly stable on a sequential basis, we did not
see our normal seasonal step-up in worker volumes, and therefore
volumes were down c.8% YoY. We continued to see some benefit from
our actions to increase fee margins and our focus on higher value
markets, together with the positive effects of wage inflation.
Fees in Perm (41% of Group fees) decreased by 17%, driven by
volumes down 25%. This was partially offset by an increase in our
Group average Perm fee, up 8%. Overall, Perm markets were
increasingly challenging, particularly in December, where slower
client and candidate decision-making led to a lower conversion of
activity to successful placements. Overall, new job registrations
remained down YoY, but were broadly stable sequentially, with lower
conversion into placements and further increases in
time-to-hire.
Group headcount and H1 FY24 working days
Group consultant headcount decreased by 5% in the quarter and
decreased by 12% year-on-year, as we managed our overall capacity,
which remained in line with market conditions until the end of
November. Additionally, our non-consultant headcount was reduced by
3% in the quarter, as we accelerated our efficiency programmes and
targeted overhead cost savings.
Also, as previously reported, Germany had two fewer working days
in the first half of FY24, which negatively impacted fees and
profit in our Temp & Contracting businesses by c.GBP3.5 million
in H1.
Outlook & Group cost savings
Given increased uncertainties and reduced client and candidate
confidence, our New Year 'return to work' will be particularly
important in FY24, and we are closely monitoring activity levels.
It is too early to say if December's weakness reflects a more
sustained market slowdown, or shorter-term deferrals of client and
candidate decision-making. However, we expect near-term market
conditions to remain challenging. Consequently, we accelerated our
cost reduction and efficiency programmes, while focusing on
increased operational performance and rigour.
Since our FY23 preliminary results in August, our actions have
reduced our costs per period by c.GBP2.5 million. This equates to
pro forma annualised Group cost savings of c.GBP30 million and, as
a result, we expect to incur an exceptional restructuring charge in
H1 FY24 of c.GBP12 million. We also expect our ongoing actions will
deliver further material Group costs reductions in H2 FY24.
Looking ahead to H2 FY24, at a Group level there are no material
working-day effects year-on-year. However, Easter is evenly split
between Q3 and Q4, while in FY23 it fell entirely in Q4. We expect
this to have a c.1% negative impact on net fees at Group level in
Q3 FY24, with a corresponding c.1% benefit to Q4 FY24.
Germany (32% of net fees)
Germany fees were flat YoY, or up 2% on a working day-adjusted
(WDA) basis.
Our largest specialism of Technology, 33% of Germany fees,
decreased by 7%, with our second largest, Engineering, up 12%.
Accountancy & Finance declined by 1%, with Construction &
Property up 4%.
Temp & contracting fees were flat YoY, or up 2% on a WDA
basis. This was driven by a 5% increase from higher margins, offset
by a 1% reduction in volumes, a 2% reduction from fewer working day
YoY and a 2% reduction from hours worked and higher sickness rates.
The decline in volumes was driven by lower new assignment sales YoY
through the quarter.
Perm fees, which represented 18% of Germany fees, were flat
YoY.
Consultant headcount decreased by 2% in the quarter and by 3%
year-on-year.
United Kingdom & Ireland (20% of net fees)
Net fees in the United Kingdom & Ireland decreased by 17%.
Temp (58% of UK&I fees) fees decreased by 13%, with Perm
slowing through the quarter and down 21%. The Private sector (64%
of UK&I fees) declined by 21%, with the Public sector down
6%.
Most regions traded broadly in line with the overall UK&I
business, apart from the Midlands and North of England, each down
10%, and Scotland, down 26%. Our largest region of London decreased
by 21%, and in Ireland, our business decreased by 4%.
At the specialism level, our two largest UK&I businesses,
Accountancy & Finance and Technology, decreased by 16% and 32%
respectively. Construction & Property decreased by 11%,
although Education fees were flat.
Consultant headcount decreased by 3% in the quarter and by 10%
year-on-year.
Australia & New Zealand (12% of net fees)
Net fees in Australia & New Zealand fell by 20%. Temp, 65%
of ANZ, decreased by 16%, with Perm slowing through the quarter and
down 27%. Private sector fees, 59% of ANZ, decreased by 25%, with
the Public sector down 13%.
Australia net fees decreased by 19%. Our largest regions of New
South Wales and Victoria, which together represented 51% of
Australia fees, decreased by 24% and 17% respectively. ACT and
Western Australia fell by 21% and 14%, with Queensland down
12%.
At the ANZ specialism level, Construction & Property (19% of
ANZ fees) decreased by 23%. Technology, our second largest
specialism, fell by 19%, while Accountancy & Finance and HR
decreased by 21% and 7% respectively.
New Zealand, 8% of ANZ net fees, decreased by 35%.
ANZ consultant headcount decreased by 11% in the quarter and by
20% year-on-year.
Rest of World (36% of net fees)
Fees in our Rest of World division, comprising 28 countries,
decreased by 11%. Perm, which represented 61% of RoW net fees,
decreased by 17%, with Temp fees down 1%.
EMEA ex-Germany (64% of RoW) fees decreased by 6% and slowed
through the quarter. France, our largest RoW country, declined by
5%, with Poland and Switzerland down 25% and 9% respectively. The
UAE, Belgium and Italy performed stronger, up 28%, 10% and 8%
respectively, while Spain was flat YoY.
The Americas (21% of RoW) fees decreased by 25%, with
challenging but broadly stable conditions through the quarter.
Canada and the USA remained tough, down 25% and 24% respectively,
with Latam down 27%.
Asia (15% of RoW) fees decreased by 11%, with conditions broadly
stable through the quarter. China fees decreased by 18%, with
Mainland China down 14% and improving through the quarter, although
Hong Kong fell 21%. Fees in Japan were flat, while Malaysia was
more resilient and grew by 8%.
RoW consultant headcount decreased by 6% in the quarter and by
15% year-on-year.
Cash flow and balance sheet
Our balance sheet remains strong with net cash at 31 December
2023 of c.GBP60 million (30 September 2023: c.GBP75 million) , in
line with our expectations. This is after paying GBP68.3 million in
core and special dividends and purchasing 8.6 million shares
(c.GBP8.6 million) in the quarter under the Treasury Share P
rogramme announced on 7 September 2023 , which has been
completed.
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
This announcement contains inside information. The person
responsible for releasing this announcement is Doug Evans, General
Counsel & Company Secretary.
Conference call
James Hilton and David Phillips will conduct a conference call
for analysts and investors at 9:00am United Kingdom time on 9
January 2024. Participants are invited to register via the URL link
below:
https://protect-eu.mimecast.com/s/j95ECQnkRHkBxj3WCVtWdm?domain=register.vevent.com
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
Half-year results for the six months ended 31 December
2023 (H1 FY24) 22 February 2024
Trading update for the quarter ending 31 March 2024
(Q3 FY24) 18 April 2024
Trading update for the quarter ending 30 June 2024
(Q4 FY24) 11 July 2024
Hays Group overview
As at 31 December 2023, Hays had c.12,300 employees in 249
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 80% of the Group's net fees in Q2 FY24, compared with
25% in FY05.
Our consultants work in a broad range of industries covering
recruitment in 21 professional and skilled specialisms. In H1 FY24
our four largest specialisms of Technology (25% of Group net fees),
Accountancy & Finance (15%), Engineering (11%) and Construction
& Property (10%) collectively represented c.61% of Group
fees.
In addition to our international and sectoral diversification,
in Q2 FY24 the Group's net fees were generated 59% from temporary
and 41% from permanent placement markets. 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
[1] Company compiled consensus operating profit for H1 FY24 is
c.GBP73m, based on 6 analysts
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END
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January 09, 2024 02:00 ET (07:00 GMT)
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