REG - Hays PLC - First Quarter Trading Statement

HaysAnnouncement

11/10/2024 07:00

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RNS Number : 7851H  Hays PLC  11 October 2024

 

QUARTERLY

UPDATE

FOR THE THREE MONTHS ENDED

30 SEPTEMBER 2024

11 October 2024

 

 

Financial summary

Growth in net fees for the quarter ended 30 September 2024 (Q1 FY25)

 (versus the same period last year)                           Growth

                     Actual                                   LFL
 By division:
                     Germany                                  (15)%  (13)%
                     United Kingdom & Ireland (UK&I)          (20)%  (20)%
                     Australia & New Zealand (ANZ)            (20)%  (20)%
                     Rest of World (RoW)                      (11)%  (9)%
                     Total                                    (15)%  (14)%

 By segment:
                     Temporary                                (11)%  (10)%
                     Permanent                                (21)%  (20)%
              Total                                           (15)%  (14)%

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

 

Dirk Hahn, Chief Executive, commented:

 

"Net fees in the quarter were down as expected reflecting the tough market
conditions, particularly in Perm where we see longer time to hire and low
levels of confidence which we expect to continue. Given this backdrop, we
remain resolutely focused on operational rigour through business line
prioritisation, resource allocation, and efficiency initiatives and, due to
our actions, Group consultant productivity increased by 5% YoY in Q1.

 

We have a strategy in place to build a structurally more profitable and
resilient business underpinned by our culture and talented colleagues
worldwide. So, I remain confident that the business will benefit materially
when our end markets recover."

 

Operational summary

 

 ·                         Group net fees down 14%, with Temp down 10% and Perm down 20%. The Group's
                           September exit rate was in line with the quarter overall
 ·                         Consultant productivity up 5% YoY driven by our continued focus on operational
                           rigour and resource allocation. Consultant headcount reduced by 2% in the
                           quarter and by 18% YoY
 ·                         Our initiatives to deliver c.£30m per annum structural savings by the end of
                           FY27 are progressing well
 ·                         Germany: fees down 13% (down 15% WDA). Temp & Contracting down 12% (down
                           14% WDA), with volumes down 9% and a 5% reduction from lower average hours
                           worked. Perm remained subdued with fees down 17%
 ·                         UK & Ireland: fees down 20%, with Temp down 16% and Perm down 26%.
                           Activity levels remained subdued but sequentially stable in the Private
                           sector. In the Public sector, Temp volumes reduced modestly through the
                           quarter
 ·                         Australia & New Zealand: fees down 20%, with Temp down 13% and Perm down
                           32%. While market conditions remain challenging, activity levels were
                           sequentially stable through the quarter
 ·                         Rest of World: fees down 9% with activity stable through the quarter. EMEA
                           ex-Germany fees declined by 11%, Asia was down 10% and the Americas down 2%
 ·                         Net cash of c.£Nil (30 June 2024: £56.8m) as we saw normal seasonal cash
                           outflows and a c.£10m cash outflow from exceptionals

 

Group

 

Q1 trading overview

Group fees decreased by 14% year-on-year on a like-for-like basis. The Group's
September fee exit rate was in line with the quarter overall, impacted by the
continued challenging conditions in our major markets. On an actual basis, net
fees decreased by 15% in the quarter, due to a strengthening of sterling
versus the euro.

Temp and Contracting fees (61% of Group fees) decreased by 10%, against a
strong YoY comparative. Overall average Temp volumes decreased by 7% YoY,
including Germany down 9%, ANZ down 17%, UK&I down 10%, and EMEA up 6%. On
a sequential basis, Temp volumes remained stable overall and average Group
Temp margin was flat YoY.

Perm fees (39% of Group fees) decreased by 20%, driven by volumes down 23%.
This was partially offset by a 3% increase in our Group average Perm fee.
Activity levels remained subdued but stable through the quarter and we
continue to see longer than normal 'time-to-hire', impacted by low levels of
client and candidate confidence.

 

Group headcount and costs

We continued to manage our consultant capacity on a business-line basis and,
despite tougher markets, our actions drove a 5% YoY improvement in average
consultant productivity. Group consultant headcount decreased by 2% in the
quarter and by 18% year-on-year. We believe our consultant headcount capacity
is appropriate for current market conditions and expect this will remain
broadly stable in Q2 25. Our focus on business line prioritisation and optimal
resource allocation will position Hays strongly for when end markets recover.

FY25 will benefit from the annualisation of c.£60m cost savings secured last
year and an initial contribution from the c.£30m per annum structural savings
we target by the end of FY27. This programme is progressing well and, as a
result of our actions, our current periodic cost base is slightly below £80m,
lower than our previous guidance of c.£82m.

Outlook

Overall, we expect near-term market conditions will remain challenging.
Activity levels in both Temp and Perm are sequentially stable overall in ANZ,
EMEA, Asia and the Americas, but remain at subdued levels driven by low levels
of client and candidate confidence and longer time to hire.

In Germany, Contracting volumes are stable and in line with our expectations,
whereas Temp is more challenging due to our exposure to the Automotive sector.
We continue to see the impact of lower Temp & Contracting hours worked and
currently anticipate a c5% headwind in Q2. Perm activity remains at a subdued
but stable level.

The UK&I has seen a modest sequential reduction in Temp volumes in the
Public sector, while Perm remains tough but stable with no clear signs of
improvement in activity.

Given we have limited forward visibility, unless we see a material recovery in
end markets, we continue to expect that pre-exceptional operating profit in H1
25 will be sequentially lower than H2 24.

 

Germany (32% of net fees)

Germany fees were down 13%, or down 15% on a WDA basis. Temp & Contracting
fees decreased by 12% (down 14% on a WDA basis) with volumes down 9%, in line
with our expectations. We continue to see greater resilience in Contracting
but more challenging markets in Temp where we have greater exposure to the
Automotive sector. Additionally, client cost controls, together with placement
mix, drove a 5% reduction in average hours worked, which led to a c.£4m fee
and operating profit impact in Q1. Temp margin and mix was flat versus the
prior year.

Activity levels remain subdued in Perm and fees decreased by 17%.

Our largest specialism of Technology, 33% of Germany fees, decreased by 15%,
with our second largest, Engineering, down 18%. Accountancy & Finance and
Construction & Property increased by 1% and 3% respectively. Public sector
fees, which represented 16% of Germany, were relatively resilient and
decreased by 9%.

Consultant headcount decreased by 1% in the quarter and by 11% year-on-year.

 

United Kingdom & Ireland (20% of net fees)

Net fees in the United Kingdom & Ireland decreased by 20%. Temp fees (57%
of UK&I fees) decreased by 16%, with Perm down 26%. Fees in the Private
sector (71% of UK&I fees) declined by 18% YoY but the Public sector was
tougher, down 25%.

Most regions traded broadly in line with the overall UK&I business, apart
from Northern Ireland, up 3%, and the North, down 34%. Our largest region of
London decreased by 20%, and Ireland decreased by 24%.

At the specialism level, Accountancy & Finance and Construction &
Property decreased by 23% and 12% respectively. Technology decreased by 32%,
although Enterprise fees were more resilient, up 1%.

Consultant headcount decreased by 2% in the quarter and by 17% year-on-year.

Australia & New Zealand (12% of net fees)

Net fees in Australia & New Zealand fell by 20% with activity stable
through the quarter. Temp, 68% of ANZ, decreased by 13%, with Perm down 32%.
Private sector fees, 63% of ANZ, decreased by 21%, with the Public sector down
17%.

Australia net fees decreased by 18%. Our largest regions of New South Wales
and Victoria, which together represented 48% of Australia fees, decreased by
24% and 22% respectively. ACT and Western Australia fell by 23% and 20%, with
Queensland down 5%.

At the ANZ specialism level, Construction & Property (20% of ANZ fees)
decreased by 19%. Technology fell by 12%, while Accountancy & Finance and
Office Support decreased by 20% and 22% respectively.

New Zealand, 6% of ANZ net fees, was tough and decreased by 42%.

Consultant headcount was flat in the quarter and down 27% year-on-year.

 

Rest of World (36% of net fees)

Fees in our Rest of World division, comprising 28 countries, decreased by 9%.
Perm, which represented 59% of RoW net fees, decreased by 16%, with Temp fees
up 3%.

EMEA ex-Germany (62% of RoW) fees decreased by 11% and activity was stable
through the quarter. France, our largest RoW country, declined by 17%, with
Poland and Switzerland down 6% and 11% respectively. Portugal and Italy
performed significantly better, up 5% and 3% respectively.

The Americas (22% of RoW) fees decreased by 2%, and activity was stable
through the quarter. Canada increased by 4%, the USA was broadly flat, and
Latam was down 14%. Americas profitability significantly improved versus a
loss-making position in the prior year.

Asia (16% of RoW) fees decreased by 10%, with mixed but overall stable
activity through the quarter. Mainland China increased by 11% and Japan was up
3% although Hong Kong was tough, down 40%. Asia profits increased by 7% versus
the prior year driven by a return to profitability in China.

RoW consultant headcount decreased by 2% in the quarter and by 20%
year-on-year.

 

Cash flow and balance sheet

The Group's net cash position was c.£Nil, in line with our expectations, down
from £56.8m in June 2024 and driven by normal cash outflows through the
summer months and c.£10m cash outflow from exceptionals.

 

Enquiries

 Hays plc                                                  Group Finance Director

James Hilton
Head of Investor Relations & ESG

Kean Marden                                                                                     +44 (0) 203 978 2520

+44 (0) 333 010 7122
 FGS Global

Guy Lamming / Anjali Unnikrishnan / Richard Crowley

                                                                                                  hays@fgsglobal.com

( )

The person responsible for releasing this announcement is Rachel Ford, General
Counsel & Company Secretary.

( )

Conference call

James Hilton and Kean Marden will conduct a conference call for analysts and investors at 8:00am United Kingdom time on 11 October 2024. Participants are invited to register via the URL link below:

https://register.vevent.com/register/BI276ce423bd8a43f4914049993329dbe0
(https://url.uk.m.mimecastprotect.com/s/ssRaCoVZPir53Rg5FVigCpD3UE?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 (https://www.haysplc.com/investors/results-centre)
.

 

Reporting calendar

 Trading update for the quarter ending 31 December 2024 (Q2 FY25)        15 January 2025
 Half-year results for the six months ending 31 December 2024 (H1 FY25)  20 February 2025
 Trading update for the quarter ending 31 March 2025 (Q3 FY25)           16 April 2025

Hays Group overview

As at 30 September 2024, Hays had c.11,100 employees in 229 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 Q1 FY25, compared with 25% in
FY05.

Our consultants work in a broad range of industries covering recruitment in 21
professional and skilled specialisms. 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 FY24.

In addition to our international and sectoral diversification, in Q1 FY25 the
Group's net fees were generated 61% from temporary and 39% 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
(https://www.haysplc.com/~/media/Files/H/Hays/annual-reports/ar-2023/hays-fy23-annual-report.pdf)
.

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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