Shares in recruitment firm Hays (HAS) were marked 1% higher to 158.6p after the FTSE 250 staffer delivered an encouraging rise in annual profit amid cost cuts and a ‘dramatic’ recovery in the Covid-disrupted jobs market.
Pre-tax profit edged 2% higher to £88.1 million in the year to June 2021, despite an 8% drop in net fees to £918.1 million that masked improved trading through the year, with Hays seeing strong sequential growth in all regions.
As previously flagged Hays, which closed the year with £411 million net cash in the coffers, also announced a welcome return to the dividend list. The company proposed one single core payment of 1.22p for the year and an 8.93p special dividend, which it will pay in November.
CONFIDENCE INCREASES
Whereas Hays’ first half fees were down 24%, they were up 13% in the second half and surged 39% higher in the fourth quarter.
Hays’ temporary recruitment business, speaking for roughly 60% of group fees, saw a much-improved second half performance, while the permanent recruitment arm operations witnessed a strong second half rebound.
‘As business and candidate confidence increased globally, our management actions drove record consultant productivity, leading to a strong recovery in fees and profits,’ enthused CEO Alistair Cox.
‘This included our largest markets of Germany, Australia and the UK, while in RoW (Rest of World) six countries delivered record fee performances, including the USA, and many countries exited the year with fee run-rates above pre-Covid levels. Across all our regions there are clear signs of skill shortages and wage inflation in certain industries, particularly Technology and Life Sciences.’
Cox said the new financial year had started well, with more consultants hired to capitalise on greater market activity.
‘Overall, the strength of the recovery has been dramatic,’ explained Cox. ‘We now see a clear route back to, and then exceeding, pre-pandemic levels of profit, faster than we envisaged even six months ago.’
THE EXPERT’S VIEW
AJ Bell financial analyst Danni Hewson commented: ‘A key problem facing many employers is the difficulty in finding skilled staff. While these shortages are bad news for business as a whole and for the economy, they aren’t necessarily bad news for the companies whose role it is to track down the right people for a job.
‘This is evident in results from recruiter Hays where it is benefiting from being able to charge top dollar for finding good candidates.
‘This is helping profit to get back to, and even exceed, pre-pandemic levels faster than expected. This in turn is underpinning the resumption of ordinary and special dividends - music to shareholders’ ears.’
However, Hewson pointed out this scenario does put Hays ‘under some pressure to deliver as proving its worth through a difficult period could yield significant long-term benefits, helping the company become even more embedded in firms’ recruitment processes.
‘On the flipside if Hays is unable to solve employers’ skills shortages problem then its relevance and credibility could take a knock.
‘Discretionary costs around travel and entertaining clients have been pushed lower by the pandemic and it will be interesting to see to what extent these come back.’
