Shares in recruitment firm Hays (HAS) buck the recent trend to trade 2% higher at 145p after the company reports another quarter of growth in fee income.

Rivals Robert Walters (RWA) and PageGroup (PAGE) were marked down following their latest updates, despite reporting fee growth of 13% and 16%.


Hays’ net fee income – also referred to as gross profits – were 9% higher in the second quarter matching the first quarter’s increase.

Germany, the firm’s biggest market accounting for 27% of fees, saw growth of 15%.

Given that fees were up 19% the previous year this is an excellent result especially as its specialist areas are IT and engineering and German industry is experiencing a slowdown.

The rest of Europe grew more slowly but Asian fees were up 18% with China showing 33% growth and Japan seeing a slight fall.

Fee growth in the Americas was strong with the US showing a 15% rise and Canada delivering a 28% rise.

Latin America was less successful with fees in Mexico down 20%.

Growth in Australia, another key market, was 10% against a very strong comparative in the first quarter a year earlier.

The IT and Office Support areas performed well but Construction & Property, the firm’s largest business in Australia, lagged with fees down 4%.


Fee growth in Hays’ home markets was less spectacular at 3% and was mostly driven by a 12% rebound in public sector hiring.

Net fees in the much bigger private sector business were flat for both temporary and permanent hirings.

The ‘northern powerhouse’ of the North West continues to lead with 9% growth in fee income while London showed a 3% rise and the South East saw an 8% fall in fee income.

IT is still the strongest business area with 13% growth while Accountancy and Office Support grew in line with the UK average and Education continued to struggle with fees down 10%.


Thanks to higher net fees, cash flow continues to grow so that even after paying out nearly £113m of final and special dividends last November the firm still had £30m of net cash by the end of December.

That figure is set to grow significantly over the second half of the year as despite mixed macro-economic conditions the outlook is still good.

That means shareholders can look forward to further increases in dividends going forward.

Issue Date: 15 Jan 2019