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Faltering global economy slows Hays

As tough macroeconomic conditions slowed the international recruiter’s momentum in 2019, the uncertainty is persisting in the current financial year
August 29, 2019

Upon cursory glance, it might appear international recruiter Hays (HAS) had a rather good 2019. Net fee income – defined as revenue minus payments to temporary workers and other recruitment agencies – saw a 6 per cent like-for-like increase to £1.13bn in the year to 30 June. But growth in relatively immature outsourcing markets belies overall slowing momentum as the group encountered weakening macroeconomic conditions in key regions.

IC TIP: Hold at 134p

Accounting for 27 per cent of the group total, Germany saw a 9 per cent jump in net fees to hit a record £300m. But quarterly growth rates slowed across the year hampered by increased client cost control and slower decision making, especially in the manufacturing and automotive sectors.

Some £15.1m in exceptional costs have weighed on statutory earnings, comprising a £8.3m pension equalisation charge and £6.8m in restructuring costs as the group scaled back European senior management in the face of a slowing market. These efficiencies delivered £2m in savings in 2019, with a further £3m expected this financial year.

Jefferies has revised its forecasts downwards, anticipating adjusted pre-tax profit of £230m and EPS of 11.1p in 2020, rising to £255m and 12.4p in 2021.

HAYS (HAS)    
ORD PRICE:134pMARKET VALUE:£1.95bn
TOUCH:133.8-134p12-MONTH HIGH:208pLOW: 132p
DIVIDEND YIELD:3%PE RATIO:12
NET ASSET VALUE:48pNET CASH:£130m
Year to 30 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20153.841567.42.76
20164.231738.52.90
20175.082059.73.22
20185.7523911.43.81
20196.0723111.13.97*
% change+6-3-4+4
Ex-div:03 Oct   
Payment:15 Nov   
*Includes intangible assets of £266m, or 18p per share **Excludes special dividend of 5.43p a share