Hays (HAS) has been investing in its international business to mitigate the uncertainty caused by Brexit. Ironically, finance director Paul Venables now describes the UK as the “most predictable” part of the global recruitment operation, generating low growth, but relatively stable. By contrast, a surprise slowdown in Continental Europe has stoked fear among investors.
Germany is Hays’ biggest division. It delivered 14 per cent growth in net fees and operating profit in the six months to December, but reported slowing growth due to fewer extensions for its contractors. Headcount in the country rose by just 55, less than one-seventh of the growth seen in the prior period.
Expansion in France slowed sharply. Net fees rose 5 per cent compared with 13 per cent in the prior period. Lower profitability in Europe contributed to a drop in the conversion rate – the ratio of operating profit to gross profit – to 21.8 per cent from 22.2 per cent previously.
In spite of this, Investors accustomed to Hays’ increasingly generous payouts are unlikely to be disappointed. The dividend continues to rise and, with net cash steady, another special payment looks likely.
Broker Jefferies trimmed its forecasts, and now expects adjusted pre-tax profits of £253m in the year to June 2019, giving EPS of 11.9p (from £239m and 11.3p in FY2018).
| HAYS (HAS) | ||||
| ORD PRICE: | 151p | MARKET VALUE: | £2.19bn | |
| TOUCH: | 150.5-151p | 12-MONTH HIGH: | 208p | LOW: 135p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 43p | NET CASH: | £32.5m | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 2.83 | 114 | 5.39 | 1.06 |
| 2018 | 3.04 | 123 | 5.86 | 1.11 |
| % change | +7 | +8 | +9 | +5 |
| Ex-div: | 7 Mar | |||
| Payment: | 12 Apr | |||
| *Includes intangible assets of £257m, or 17.6p a share. | ||||
