Concerns about another global recession has hit cyclically-exposed stocks since the start of the year. That effect was evident again this week after a slowing of UK net fee growth at recruitment giant Hays (HAS), marked by weaker demand from finance and accounting clients, sent the company's share price down more than 7 per cent. The financial industry in the UK is seen as a bellwether, not just for the recruitment sector, but of the state of the wider economy.
Otherwise, the group's interim results were largely in line with what the market expected. Continental Europe - a largely undeveloped market as far as agency recruitment goes - is still growing fast, with net fees up 14 per cent on a like-for-like basis and underlying operating profits up a solid 17 per cent. Even Australia and New Zealand, which have suffered thanks to the depressed resources sector, grew net fees and operating profit by 3 per cent and 5 per cent, respectively.
Overall, the group's conversion rate grew by 50 basis points to 21.7 per cent and, although UK fee growth is under pressure, profits there grew by 20 per cent - the strongest performance across all geographies.
Analysts at Stifel expect pre-tax profits of £168m for the year ending June 2016, giving EPS of 8p, compared to £156m and 7.3p in FY2015.
| HAYS (HAS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 116p | MARKET VALUE: | £1.66bn | |
| TOUCH: | 115.9-116.4p | 12-MONTH HIGH: | 174p | LOW: 113p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 20p* | NET DEBT: | 19% | |
| Half-yearto 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 1.91 | 77.3 | 3.6 | 0.87 |
| 2015 | 2.04 | 82.4 | 4.0 | 0.91 |
| % change | +7 | +7 | +10 | +5 |
Ex-div: 3 Mar Payment: 5 Apr *Includes intangible assets of £229m, or 16p a share | ||||
