Shares in recruiter Hays (HAS) are among the biggest fallers in the FTSE 350 index losing 13% after the company reported first-quarter net fee income just shy of estimates.

Group net fees were up 9% on a like-for-like basis in the first quarter against a run-rate of 10%-plus over the previous four quarters.

The slowdown was due to a moderation in growth in continental Europe during the second half of September which saw fewer jobs being filled.


In Germany, which is the company’s biggest market and where Hays is the biggest recruiter by a wide margin, fees hit a record level for the second consecutive quarter with growth of 13% despite tough prior-year comparisons.

In France and Belgium, net fees grew by 8% and 3% after several years of double-digit increases while Spain continued to show strong growth.

Growth in the UK was positive again with public-sector net fees up 8% and private-sector fees which are the bulk of the business up 1%.

There were stand-out performances from the South West, Wales and Northern Ireland, while the Midlands and the South East saw net fees fall. In contrast to other recruiters Hays saw its fees in London rise by a healthy 5%.

Demand for IT staff remains high and a shortage of suitable skilled applicants is starting to feed through into starting salaries although talk of widespread wage rises is premature according to Hays chief financial officer Paul Venables.


The company’s businesses in China and the US performed extremely well with net fee growth of 29% and 27% respectively. Both are obviously large markets with plenty of room for Hays to grow in the medium term.

Looking ahead to the second quarter, group net fees are seen rising at the same rate as Q1 on a like-for-like basis while the strength of sterling could represent a headwind if it reduces the value of overseas revenues.

Issue Date: 11 Oct 2018