Despite CEO Alistair Cox recently describing aspects of London-headquartered international recruitment firm Hays’ UK business as ‘resilient’ (see here), in fact UK operations recorded a £6.5m operating loss in the FY to 30th June. UK net fee income (NFI – gross profit) now represents just over 30% of the total, having fallen by 7% to £225m, in contrast with an 8% like-for-like NFI growth worldwide, to £734m. Hays held group operating margins stable at 3.5%.
The ‘glass half full’ view shows the success that Hays has achieved over the past 10 years with geographical diversification. Hays' international business increased from 15% of NFI a decade ago to two-thirds today. Indeed, Hays opened 5 new offices outside of the UK during the year, but closed 15 here.
The ‘glass half empty’ story says that part of this mix shift is due to its declining UK business, which ‘became increasingly difficult as the year progressed’, and not just in the troubled Banking and City-related sectors. However, the UK energy sector proved buoyant, with NFI up 40%, and even IT recruitment showed a 5% NFI rise (though is less than 10% of Hays' UK business), as did Life Sciences. Cox recently installed new UK management to try get the domestic business back on its feet.
Most of Hays’ peers are echoing similar sentiments – especially UK vs international – though for IT recruitment in particular, it seems that Zurich-headquartered Adecco did significantly better (see UK IT still strong for Adecco). Given the still depressing outlook for UK economic growth, Hays, like most of its peers, will likely need to continue bailing out the UK boat while its international fleet powers full steam ahead.