Multinational, multi-discipline recruitment firm Hays’ interim results confirm the picture painted in its January trading statement: strong growth from its international business and the UK private sector dragged down by the UK public sector market, which remains dismal. Overall, Hays’ net fee income (which equates to gross profit) for the six months to end December '10 was up 20% (before exceptionals) to £326.1m. Operating profit was 38% higher on the same basis at just over £52m. Asia Pacific was a strong engine for growth (+38% NFI), but Continental Europe and RoW also saw a 33% increase in net fees (led by Germany at +38%).
In contrast, in the UK and Ireland net fees increased by just 1% to £123m, and operating profit declined by 66% to just £2.1m. As a result, 62% of Group net fees are now generated outside the UK, up from 54% last year. The net fee stability in the UK masks strong growth in the private sector (+27% NFI) but much tougher conditions in the public sector, which saw NFI drop by 36% in the period. The recovery in the private sector appears broad-based with notable growth from Hays’ IT as well as Accountancy & Finance and other City-related businesses.
Hays is doing what it can to mitigate the declines in the public sector, which now accounts for 26% of UK net fees and 9% of group net fees. Consultant headcount in the UK & Ireland decreased by 7% in the half because of the difficult public sector market, whereas investment continues in the International business, which saw a 13% increase in consultant headcount in the period. With the UK public sector staffing market set to remain challenging in the months ahead, Hays will be glad of its broad geographic and sector spread. Indeed, CE Alistair Cox believes “the business is well placed to capitalise on the excellent long term structural growth prospects ahead.”