A multitude of obstacles across Hays' (HAS) geographies have been noted in the recruiter’s recent updates, which helps to explain why the share price reaction to its half-year results was muted, despite a near 20 per cent drop in operating profit and a 370 basis point haircut for the conversion rate (i.e, successful placements).
As we flagged earlier this year, strikes in France, the UK general election and bushfires in Australia along with a slowdown in Germany - the group’s largest geography - stalled hiring activity. Mercifully, these events are all now in the past, but the new year “return to work” period has also been slower, especially in temporary and contractor markets, most noticeably in Germany, the UK and Australia.
The elephant in the room - an as yet unquantifiable elephant - is the potential impact of the Covid-19 outbreak. Finance director Paul Venables stressed that it was too early to know what the full impact will be, though the group noted a - hardly surprising - material impact on the Chinese market to the start of the year.
However, Mr Venables added that the group was still highly cash-generative and expects to pay out yet another special dividend in the year (the interim payment was held level, and he expects the same for the core payment). Investments are being made in the group’s IT specialism, and an efficiency initiative is under way to take £5m of costs out of the business.
Jefferies is forecasting adjusted pre-tax profit of £177m for the full year, giving EPS of 8.42p, down from £246m and 11.77p in 2019.
| HAYS (HAS) | ||||
| ORD PRICE: | 163p | MARKET VALUE: | £ 2.39bn | |
| TOUCH: | 162.4-163p | 12-MONTH HIGH: | 186p | LOW: 127p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 43p* | NET DEBT: | 34%** | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 3.04 | 123 | 5.86 | 1.11 |
| 2019 | 3.10 | 95.6 | 4.60 | 1.11 |
| % change | +2 | -22 | -22 | - |
| Ex-div: | 05 Mar | |||
| Payment: | 09 Apr | |||
| *Includes intangible assets of £263m, or 18p a share. **Includes lease liabilities of £228m | ||||
