REG - Hays PLC - Second Quarter Trading Update

HaysAnnouncement

13/01/2022 07:05

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220113:nRSM2797Ya&default-theme=true

RNS Number : 2797Y  Hays PLC  13 January 2022

QUARTERLY UPDATE

FOR THE THREE MONTHS ENDED

31 December 2021

13 January 2022

 

Financial summary

Growth in net fees for the quarter ended 31 December 2021 (Q2 FY22)

 (versus the same period last year)                           Growth

                     Actual                                   LFL
 By region:
                     Australia & New Zealand (ANZ)            28%   31%
                     Germany                                  29%   37%
                     United Kingdom & Ireland (UK&I)          33%   33%
                     Rest of World (RoW)                      35%   41%
                     Total                                    32%   37%

 By segment:
                     Temporary                                18%   22%
                     Permanent                                55%   61%
            Total                                             32%   37%

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

·      Record quarter, with excellent fee growth in all regions. Fees up
37%, led by Perm up 61%. Temp up 22%, with strong margin and volume growth
through the quarter. Fees up 11% versus Q2 FY20((1))

·      Given the strong fee performance, operating profit for the year
to 30 June 2022 is expected to be c.£200 million, ahead of consensus market
expectations((2))

·      Australia & New Zealand (ANZ): fees up 31%, with momentum
improving following the lifting of lockdowns in October. Perm up an excellent
75% and Temp up 15%

·      Germany: fees up 37%, with Temp & Contracting up 33% and Perm
up 58%. Activity improved through the quarter, with record contractor numbers
and November delivering record fees

·      UK & Ireland (UK&I): fees up 33%, led by an excellent
Perm performance, up 69%, with Temp up 13%. The Private sector, up 46%,
significantly outperformed the Public sector, up 12%

·      Rest of World (RoW): fees up 41%, led by Perm up 55% and Temp up
20%. EMEA ex-Germany up 33%, including record quarters in Switzerland, Spain
and Poland. Americas fees up an excellent 55%, including a record in the USA.
Asia fees also excellent, up 53% and including records in China and Malaysia

·      Excellent consultant productivity, despite Group consultant
headcount increasing by 6% in the quarter and by 26% YoY, as we invested to
capitalise on the cyclical recovery and structural growth opportunities

·      Strong net cash position of c.£235 million, in line with our
expectations and after paying c.£170 million in core and special dividends in
November 2021 (30 September 2021: £360 million; 31 December 2020: £380
million)

Commenting on the Group's performance, Alistair Cox, Chief Executive, said:

 

"We saw strong performances in all regions in the quarter, and we expect
operating profit for the year to 30 June 2022 will be c.£200 million, ahead
of consensus market expectations((2)). 16 countries delivered record quarterly
fees, as did Hays Technology, our largest specialism. Our largest country,
Germany, delivered record Contracting fees, and activity in ANZ accelerated as
lockdown restrictions were lifted. The UK, Continental Europe, Asia and the
Americas all delivered excellent growth, again led by Perm as business
confidence remained high.

 

"It is too early to quantify how the Omicron variant will impact our New Year
'return to work' trends, which as usual will be a key driver of second half
performance. However, client and candidate confidence remain high, with clear
signs of skill shortages and wage inflation. Encouragingly, despite
significant headcount investment in the past year, consultant productivity is
excellent, and we expect to drive productivity further. Our Strategic Growth
Initiatives continue to perform very well, and as global economies continue to
rebound, I am confident we will take further market share as we invest in the
cyclical recovery, as well as opening up many structural growth
opportunities."

 

Group

Q2 trading overview

The quarter represented a net fee record for the Group, up 37% on a
like-for-like basis versus the prior year, despite a tougher prior year growth
comparative and the effect of December holidays in many markets. We also
delivered sequential growth versus Q1 FY22 in both Temp and Perm fees. On an
actual basis, net fees increased by 32%, with the significant strengthening of
sterling versus the euro and Australian dollar reducing our reported net fees.
Growth and activity levels were strong in all regions, and November delivered
an all-time period((3)) fee record.

Like-for-like net fees in Temp (55% of Group fees) and Perm (45% of Group
fees) increased by 22% and 61% respectively. Activity levels in both Perm and
Temp remained strong through the quarter across all our markets. In Temp we
saw strong margin and volume growth through the quarter, including a record
number of Contractors in our largest market of Germany. Fees in the Private
sector (83% of Group fees) increased by an excellent 42%, with the Public
sector, which was relatively resilient in the prior year, up 16%.

Overall, Group fees in the quarter were 11% above Q2 FY20((1)), or 7% above Q2
FY19((1)). Versus Q2 FY20((1)), Perm fees increased by 19% and Temp by 6%.
Regionally versus Q2 FY20((1)), ANZ fees increased by 6%, Germany by 10%,
UK&I by 7% and RoW by 19%.

Our largest global specialism of Technology (25% of Group fees) delivered
record fees, up 33%, and fees were 20% above Q2 FY20((1)). Construction &
Property and Accountancy & Finance increased by 23% and 43% respectively.
Hays Talent Solutions (HTS), our large Corporate Accounts business, delivered
another record quarter with fees up by 36% and continues to win market share,
with a strong pipeline of opportunities.

The Group's December net fee growth exit rate was 34%.

Investment in Group headcount

Group consultant headcount increased by 6% in the quarter and by 26%
year-on-year. Encouragingly, despite this increased headcount average
productivity per consultant remained at excellent levels in the quarter. We
expect to add 2-4% to consultant headcount in Q3 FY22, mainly in our Strategic
Growth Initiatives and in Germany, as we balance driving consultant
productivity and profit growth with adding further capacity in long-term
structural growth markets.

Foreign exchange

The strengthening of Sterling versus our main trading currencies of the Euro
and Australian dollar is currently a headwind to Group operating profit in
FY22. If we re-translate FY21 profits of £95.1m at 11 January 2022 exchange
rates (AUD1.8927 and €1.1988), operating profit would decline by c.£7
million, a c.£2 million deterioration versus the position at our Q1 FY22
trading update in October. Given our operating profit increases significantly
in FY22, FX movements will have a much larger negative impact.

( )

((1) )Given our June year end, Q2 FY20 represents the three months ended 31
December 2019, and Q2 FY19 represents the three months ended 31 December 2018.

((2)) Bloomberg median consensus operating profit for FY22 on 11 January 2022
stood at £183.5 million.

((3)) Due to the cycle of our internal Group reporting, we report our annual
fees over 13 periods, based on a mixture of four-weekly and monthly reporting
businesses. This is consistent with prior years.

 

Australia & New Zealand (16% of net fees)

Net fees in Australia & New Zealand (ANZ) increased by 31%, with momentum
improving following the lifting of lockdowns in October. ANZ fees increased by
6% versus Q2 FY20((1)).

Perm net fees, which represented 36% of ANZ, grew by an excellent 75%. Temp,
64% of ANZ, increased by 15% versus a relatively resilient prior year growth
comparative. Private sector net fees, which represented 62% of ANZ, increased
by 36%, with the Public sector up 24%.

Australia net fees increased by 30%. Our largest regions of New South Wales
and Victoria, which together represented 53% of Australian net fees, grew by
39% and 37% respectively. Queensland increased by 31%, with Western Australia
up 11% and ACT up 13%.

At the Australia specialism level, Construction & Property, our largest
business representing 17% of Australia fees, increased by 11%. Technology, our
second largest specialism, was much stronger and grew by 44%, with Office
Support and Accountancy & Finance both continuing to rebound strongly, up
47% and 34% respectively. HR increased by an excellent 49%.

New Zealand, 8% of ANZ net fees, continued its strong run and produced record
fees, increasing by an excellent 56%.

ANZ consultant headcount increased by 3% in the quarter and by 29%
year-on-year.

Germany (25% of net fees)

Net fees in Germany increased by 37%, with activity improving through the
quarter and fees growing sequentially versus Q1 FY22. November also delivered
a monthly fee record. Overall business confidence continued to improve with
clients increasingly investing in new, and extending existing, projects.
Germany fees increased by 10% versus Q2 FY20((1)).

Our largest specialism of Technology increased by 19%, with our second
largest, Engineering, up 57%. Accountancy & Finance and Construction &
Property grew by 38% and 18% respectively, with growth in HR and Sales &
Marketing much stronger, up 412% and 65% respectively. Private sector fees
(87% of Germany) increased by 41%, with the Public sector up 14%.

Our largest area of Contracting (57% of Germany net fees), which is primarily
in the Technology sector, delivered a record quarter, up 22%, driven by 27%
growth in contractor volumes, with average contractor volumes c.10% above
prior peak levels. This was partially offset by c.5% lower average weekly
hours per contractor.

Fees in Temp (26% of Germany net fees), which is mainly in Engineering &
Manufacturing and where we employ temporary workers as required under German
law, increased by 68%. Temp volumes improved through the quarter, although
given the slower recovery in the Automotive & Manufacturing sectors,
average volumes remain c.18% below prior peak levels. Our comparative fees in
Q2 FY21 included c.£1.0 million in Temp severance costs and excluding this,
underlying Temp fees increased by 51%.

Perm, which represented 17% of Germany fees, delivered an excellent
performance, and increased by 58%.

Consultant headcount increased by 5% in the quarter and by 12% year-on-year.

United Kingdom & Ireland (23% of net fees)

Net fees in the United Kingdom & Ireland (UK&I) increased by 33%, with
sequential fee growth versus Q1 FY22. Performance was led by Perm, 46% of
UK&I fees, up an excellent 69%, with Temp up 13%. The Private sector, 68%
of UK&I net fees, grew by 46% and the Public sector increased by 12%.
UK&I fees increased by 7% versus Q2 FY20((1)).

Most regions traded broadly in line with the overall UK business, apart from
the East of England and Scotland, which grew by 44% and 39% respectively. Our
largest region of London increased by 34%, including London City up 68%, and
in Ireland our business increased by 63%.

At the specialism level, Technology delivered excellent growth and Accountancy
& Finance rebounded sharply, up 43% and 48% respectively. Our fastest
growth came in HR, Legal and Office Support, up 105%, 79% and 72%
respectively, while Construction & Property increased by 11%.

Consultant headcount increased by 7% in the quarter and by 23% year-on-year.

 

Rest of World (36% of net fees)

Our Rest of World (RoW) division, comprising 28 countries, grew net fees by
41%, including 15 quarterly fee records and delivered good sequential growth
versus Q1 FY22. Perm, which represented 68% of RoW net fees, increased by 55%
with Temp up 20%. RoW fees increased by 19% versus Q2 FY20((1)).

EMEA ex-Germany (57% of RoW net fees) net fees increased by 33%, with activity
levels remaining high. Ten countries delivered record fee performances,
including Switzerland, up 30%, Poland 45%, Italy 51% and Spain 28%.  Fees in
France, our largest RoW country, grew by 33%.

The Americas (25% of RoW) net fees increased by 55%. The USA, our
second-largest RoW country, delivered another record quarter and grew by 51%,
with Canada up an excellent 60%. Latin America also grew by 65%, including
Brazil up 79%.

Asia (18% of RoW) net fees increased by 53%. China, our third-largest RoW
country, and Malaysia both delivered record quarters, growing by 59% and 53%
respectively. Singapore grew by 63% and Japan showed improved momentum, with
fees up 38%.

RoW consultant headcount increased by 7% in the quarter and by 35%
year-on-year.

 

Cash flow, balance sheet and dividends

Strong Group net cash position at 31 December 2021 of c.£235 million, in line
with our expectations and after paying c.£170 million in core and special
dividends in November (30 September 2021: £360 million; 31 December 2020:
£380 million, excluding short-term deferrals of tax payments).

During the quarter we purchased 8.0 million shares under our Treasury share
purchase programme, at an average price of 148.3p per share. The shares will
be held in treasury and utilised to satisfy employee share-based award
obligations over the next two years.

 

 

Enquiries

 Hays plc                  Group Finance Director

Paul Venables
Head of Investor Relations

David Phillips                                        +44 (0) 203 978 2520

+44 (0) 333 010 7122
 Finsbury

Guy Lamming

hays@finsbury.com
 Anjali Unnikrishnan

( )

( )

Conference call

Paul Venables and David Phillips of Hays plc will conduct a conference call for analysts and investors at 8:00am United Kingdom time on 13 January 2022. The dial-in details are as follows:
 Dial-in number                                 0203 936 2999
 Dial-in number (UK toll free)                  0800 640 6441
 Password                                       833956

 The call will be recorded and available for playback for seven days as
 follows:
 Replay dial-in number                          +44 (0) 203 936 3001
 Access code                                    334728

 

Reporting calendar

 Half-year results for the six months ended 31 December 2021    24 February 2022
 Trading update for the quarter (Q3 FY22) ending 31 March 2022  14 April 2022
 Investor day                                                   28 April 2022
 Trading update for the quarter (Q4 FY22) ending 30 June 2022   14 July 2022

Hays Group overview

As at 31 December 2021, Hays had c.12,000 employees in 255 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 c.78% of the Group's net fees in FY21, compared with 25% in FY05.

Our consultants work in a broad range of sectors covering 20 professional and
skilled recruitment specialisms, and in FY21 our three largest specialisms of
Technology (25% of Group net fees), Accountancy & Finance (14%) and
Construction & Property (12%) together represented 51% of Group fees.

In addition to our international and sectoral diversification, in Q2 FY22 the
Group's net fees were generated 55% from temporary and 45% 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 helping people succeed and enabling
organisations to thrive, 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 focus on doing the right thing. Linked to this,
Hays has endorsed three United Nations Sustainable Development Goals (UNSDG's)
- Decent Work & Economic Growth; Gender Equality; and Climate Action.
These call upon businesses to advance sustainable development through the
investments they make, the solutions they develop and the practices they
adopt.

We believe that responsible companies should have Equity, Diversity &
Inclusion at their heart. Our global ED&I Council helps co-ordinate and
drive our actions and made excellent progress in FY21. For the first time in
our history, we have set stretching targets on female representation in senior
management. By 2025, we have committed to reach a level of 45% female leaders
(FY21: 42% female) among our senior leadership of c.560 individuals, and to
reach 50% by 2030.

As a business which exists to help people further their careers and fulfil
their potential, the goal of Decent Work and economic growth sits very close
to Hays' purpose. Over the last four years we are proud to have placed well
over one million people globally in their next job; helping the individual,
their employer and society. We have reinforced our Decent Work & Economic
Growth commitment through Hays Thrive, our free-to-use online Training &
Wellbeing platform. Overall, across all our online platforms, over 850,000
individual training courses were undertaken on our web platforms in the last
year, equating to c.26 million minutes of online learning.

We believe we have a significant role to play in combating climate change. As
part of our ongoing commitment to Environmental, Social & Governance
matters (ESG), we will set Science-based targets for Carbon reduction, in line
with the Paris Agreement. We became a Carbon Neutral company in 2021 and are
well on the way to becoming 'Net Zero' in due course. As part of our Net Zero
journey, we submitted our Science-based target in support of the Paris
Agreement on Climate change to the SBTi Q2.

We also recognise the significant opportunities which 'Green' and
'Sustainable' economies present. We are a large recruiter of skilled workers
in low carbon, social infrastructure and ESG roles, and we are actively
growing our ESG talent pools, helping to solve global skill shortages.

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.

 

This announcement contains inside information.

LEI code: 213800QC8AWD4BO8TH08

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTDZGMMLZLGZZM