After warning last month of a tough Q2 in the UK (see UK ‘blot’ spreads at Hays), London-based international recruiting giant, Hays, saw its UK profits dip under water in H1 (to 31st Dec.) as activity slowed in private sector as well as public sector recruitment.
Net fee income (NFI, i.e. gross profit) for Hays UK (inc. Ireland) fell by 6% (like-for-like, LFL) to £116.4m, with private sector NFI falling by 1% and public sector NFI plummeting 18%. This translated into a £3.1m operating loss (H1 11: +£2.1m). It has to be said, this is not a sign of good operational management. After all, a recruitment firm is simply a ‘people reseller’ taking a margin on the bodies sold – no ‘inventory’; no real responsibility for ‘product performance’ – you really should not lose money in this business!
Just as well that Hays’ overseas operations are in better shape. Worldwide revenues grew by 16% LFL to £1.86b, though NFI margins were 60bps down yoy at 20.1%. Operating margins fell by 10bps, at 3.4%. Hays CEO, Alistair Cox, said that the UK market remains challenging but stable since the beginning of the year.