REG - Hays PLC - Third Quarter Trading Statement
16/04/2025 07:00
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RNS Number : 1793F Hays PLC 16 April 2025
QUARTERLY
UPDATE
FOR THE THREE MONTHS ENDED
31 MARCH 2025
16 April 2025
Financial summary
Growth in net fees for the quarter ended 31 March 2025 (Q3 FY25)
YoY Growth
Actual
LFL
Germany (11)% (9)%
United Kingdom & Ireland (UK&I) (13)% (13)%
Australia & New Zealand (ANZ) (14)% (11)%
Rest of World (RoW) (9)% (7)%
Total (11)% (9)%
Temp & Contracting (8)% (6)%
Permanent (15)% (14)%
Total (11)% (9)%
Note: unless otherwise stated, all growth rates discussed in this statement
are LFL (like-for-like) fees, representing year-on-year organic growth of
continuing operations at constant currency
Highlights
· Group net fees down 9% YoY with Temp & Contracting and Perm down 6% and
14% respectively
· Temp & Contracting volumes have rebuilt through the quarter in line with
prior year in UK&I and ANZ, although remain modestly behind in Germany.
Perm markets remain challenging with longer time to hire
· Consultant productivity up 5% YoY driven by our continued focus on operational
rigour and resource allocation. Consultant headcount reduced by 5%
sequentially in the quarter and by 13% YoY
· Initiatives to deliver structural back-office efficiency cost savings of
c.£30m per annum by the end of FY27 are progressing well and consequently our
periodic cost base has improved to c.£76m from c.£77m in Q2
· c.£30m net debt (31 December 2024: £29.0m net cash) reflecting seasonal
outflows and timing of month end payments, with DSO maintained at 37 days
· The March net fee growth rate was minus 7% working day adjusted. We expect
near term market conditions to remain challenging however, despite ongoing
uncertainties, we currently expect FY25 operating profit will be in line with
consensus*
* Company compiled consensus operating profit for FY25 is £56.9m, based on
nine analysts who have updated since the half year results.
Dirk Hahn, Chief Executive, commented:
"Despite ongoing and increasing macroeconomic uncertainty and challenging Perm
conditions, trading was sequentially stable through the quarter. In line with
our focussed strategy to build a structurally more profitable, resilient and
growing business we were pleased to deliver 10% net fee growth with large
Enterprise clients and good Temp & Contracting net fee growth in several
of our Focus countries.
Our initiatives to improve net fee productivity in real terms and back-office
efficiency are important drivers of profit recovery. We delivered 5% YoY
consultant fee productivity growth in Q3, which remains sector leading, and
our structural cost savings initiatives are progressing well, including in the
UK&I where we expect an improved profit performance in H2. We are
structurally improving Hays and I remain confident that we will benefit
materially when markets recover."
Group
Q3 trading overview; Trading was sequentially stable through the quarter
Group net fees decreased by 9% year-on-year on a like-for-like basis. On an
actual basis, net fees decreased by 11% year-on-year, due to a strengthening
of sterling versus the Euro.
Temp & Contracting net fees decreased by 6% with activity levels and
volumes rebuilding through the quarter in line with normal trends, except for
our Temp business in Germany which remains subdued due to its exposure to the
automotive sector. Group Temp & Contracting volumes decreased by 7% YoY,
including Germany down 10%, ANZ down 12%, UK&I down 10%, and RoW up 6%.
The latter once again included strong performances in several of our Focus
countries.
Perm net fees decreased by 14%, driven by a 19% decline in volumes partially
offset by a 5% increase in our Group average fee. Perm job flow and activity
levels have returned to pre-Christmas levels in UK&I, ANZ and North
America but remain subdued in EMEA (particularly France) and Germany.
The March growth rate was minus 7% on a working day adjusted basis, as net
fees declined by 13% YoY in Perm and, on a working day adjusted basis, by 3%
in Temp & Contracting.
Building a structurally more profitable and resilient business
We are making progress on our strategy to build a structurally more resilient,
profitable and growing business underpinned by our culture and talented
colleagues worldwide. Through our five levers, we will achieve this by
increasing our exposure to the most in-demand future job categories, growing
industries and end-markets, higher skilled and higher paid roles, non-Perm
recruitment and large Enterprise clients. Our strategy is not
'one-size-fits-all' and we will tailor each region and country to its market
and customer needs.
Business line prioritisation, optimised resource allocation, and scaling our
eight Focus countries will establish a broader base and enable the Group to
return to, and then exceed, our previous peak profits of £250m.
As we outlined at the interim results, our initiatives to increase net fee
productivity in real terms and improve back-office efficiency are important
drivers of profit recovery and are independent of the economic cycle.
Net fee growth with Enterprise clients remained strong at 10% in Q3
Our Enterprise business was again strong and we delivered 10% YoY net fee
growth in Q3. We have grown within existing clients driven by headcount
investment, higher fill rates, and geographic expansion. In addition, we
secured 31 new client wins during the quarter and renewed existing contracts
with Mitie and Kier.
Enterprise currently has a substantial bid pipeline, particularly in North
America, and several preferred bidder decisions are scheduled over the next
few months. Our win rate has significantly improved over the last two years
driven by growing reputation for excellent client service (we were awarded
Supplier of the Year, category Collaboration Excellence, by Capgemini in the
quarter) and enhancements to our deal qualification discipline under a new
global sales process.
Sustaining our sector leading productivity momentum
We continued to manage our consultant capacity on a business line basis and,
despite challenging markets, our resource allocation actions drove a 5% YoY
improvement in average consultant net fee productivity. This continues the
encouraging trend from the first half, and our momentum has once again led the
sector over this period. On a seasonally adjusted basis, adjusting for our
quieter second quarter, productivity has increased now for six consecutive
quarters.
Group consultant headcount decreased by 5% sequentially in the quarter and by
13% year-on-year.
Periodic constant currency cost base has improved further to c.£76m
Our programme to deliver c.£30m per annum structural back-office efficiency
cost savings by the end of FY27, notably in our finance and technology
functions, continues to progress well. We materially reduced the cost base in
UK&I and Germany during the quarter through restructuring of operations
and back-office functions. We have removed duplicated costs, delayered
management, outsourced selective opportunities, further standardised and
globalised processes, and expanded our shared service centres. Non-consultant
headcount exited the quarter down 17% YoY.
Consequently, our cost base on a periodic and constant currency basis has
improved to c.£76m from c.£77m in Q2.
Trading Outlook
Given increasing macroeconomic uncertainty, we expect near term market
conditions to remain challenging and, although we have limited forward
visibility, we believe this is likely to persist into FY26. Perm markets
remain difficult, notably in Germany and EMEA, due to longer time to hire but
Temp & Contracting are more resilient.
We have maintained good levels of productivity through Q3 and believe our
Group consultant headcount capacity is appropriate for current market
conditions, and therefore expect it to remain broadly stable in Q4. We will
continue to deliver further efficiencies, which will structurally reduce our
cost base, and focus on business line prioritisation and optimal resource
allocation to position Hays strongly for when end markets recover.
Easter falls entirely in Q4 and was evenly split between Q3 and Q4 in FY24. We
expect this to have a c.1% negative impact on year-on-year net fee growth in
Q4 FY25.
Divisional Net Fee Analysis
Temp & Contracting Perm Total
% of Divisional net fees LFL % of Divisional net fees LFL % of Group net fees LFL
Germany 85% (6)% 15% (21)% 32% (9)%
United Kingdom & Ireland 60% (11)% 40% (16)% 20% (13)%
Australia & New Zealand 68% (6)% 32% (20)% 11% (11)%
Rest of World 42% (2)% 58% (10)% 37% (7)%
Total 62% (6)% 38% (14)% 100% (9)%
Germany: Resilience in Contracting; Temp and Perm remain challenging
Germany net fees were down 9%. Temp & Contracting decreased by 6% with
volumes down 10%. Contracting volumes remain solid overall with fewer
finishers offsetting lower starters, and steady trends in fee rates and
average hours worked. The latter remains stable sequentially and, due to the
easier comparable, the YoY headwind is likely to be modest in Q4.
In Temp, volumes and starter numbers remain weak, due to automotive related
headwinds. Perm remained challenging and net fees decreased by 21%.
Our largest specialism of Technology, 32% of Germany fees, decreased by 8%,
with our second largest, Engineering, down 19%. Accountancy & Finance was
up 2%. Construction & Property performed strongly and increased by 34%
driven by our focus on infrastructure and the energy sector. Public sector net
fees, which represented 16% of Germany, decreased by 7%.
Consultant headcount decreased by 4% in the quarter and by 13% year-on-year.
Driven by our ongoing resource allocation and back-office efficiency
initiatives, consultant net fee productivity increased by 5% YoY in Q3 and
non-consultant headcount reduced further.
United Kingdom & Ireland: Action taken to improve productivity and reduce
cost
Net fees in the United Kingdom & Ireland decreased by 13% with Temp &
Contracting and Perm down 11% and 16% respectively. Following a good Return to
Work, Temp & Contracting net fees were solid and Perm remained challenging
but stable. The Private sector (70% of UK&I net fees) declined by 10% YoY
but the Public sector was tougher, down 19%.
Most regions traded broadly in line with the overall UK&I division, apart
from Northern Ireland, down 19%, and the North, down 24%. Our largest region
of London decreased by 7%, and Ireland decreased by 24%.
At the specialism level, Accountancy & Finance and Technology decreased by
17% and 19% respectively. Construction & Property decreased by 7% but
delivered a modest sequential improvement through the quarter. Enterprise
performed well with net fees up 8%.
Consultant headcount was decreased by 11% in the quarter and by 20%
year-on-year. We were not satisfied with our first half performance and have
taken action over the last six months to improve consultant net fee
productivity which increased by 8% YoY in Q3, and have made good progress with
our operational efficiency initiatives. Through these focussed actions to
improve productivity and reduce cost, we expect an improved profit performance
from the UK&I in the second half. Our new UK&I CEO joins Hays in June
2025.
Australia & New Zealand: Stable activity through the quarter
Net fees in Australia & New Zealand fell by 11% with activity stable
through the quarter. Following a good Return to Work, Temp & Contracting
decreased by 6%, although conversion of Perm activity remained challenging and
Perm net fees were down 20%. Private sector net fees, 66% of ANZ, decreased by
9%, with the Public sector again tougher and down 14%.
Australia net fees decreased by 9%. Our largest regions of New South Wales and
Victoria, which together represented 47% of Australia net fees, decreased by
12% and 20% respectively. ACT and Western Australia fell by 3% and 2%, with
Queensland also down 2%. New Zealand, 6% of ANZ net fees, was tough and
decreased by 25%.
At the ANZ specialism level, Construction & Property (19% of ANZ net fees)
decreased by 17%. Technology fell by 8%, while Accountancy & Finance and
Office Support decreased by 19% and 8% respectively.
Consultant headcount decreased by 4% in the quarter and by 16% year-on-year.
Driven by our focus on resource allocation, consultant net fee productivity
increased by 6% YoY in Q3.
Rest of World: EMEA Perm remains challenging; Positive growth in Americas and
EMEA Temp & Contracting
Net fees in our Rest of World division, comprising 28 countries, decreased by
7% with Temp & Contracting down 2% and Perm down 10%.
EMEA ex-Germany (63% of RoW) net fees decreased by 10%. France, our largest
RoW country, was tough with net fees down 19% and action is underway to
address productivity and costs. Spain, Portugal and Netherlands performed
strongly, up 10%, 14% and 9% respectively, whereas Austria, Poland and
Switzerland were down 1%, 4% and 13% respectively.
The Americas (22% of RoW) net fees grew by 2% with growth in Canada and the
US, up 1% and 5% respectively. Latam, down 6%, was again challenging but
stable and we recently announced our intention to close our operations in
Chile, Colombia, Rio de Janeiro, and Campinas and focus on two high potential
markets by creating flagship offices in Sao Paulo and Mexico City.
Asia (15% of RoW) net fees decreased by 6%, with mixed but overall stable
activity through the quarter. Mainland China increased by 9% and the YoY
decline in Hong Kong moderated to 15%. Japan was more challenging, down 23%.
RoW consultant headcount decreased by 3% in the quarter and was down 9%
year-on-year.
Cash flow and balance sheet
Net debt of c.£30m (31 December 2024: £29.0m net cash) reflected normal
seasonal outflows and timing of month end payments, with DSOs maintained
through the quarter at 37 days, and c.£5m cash exceptionals. Our fourth
quarter is typically stronger and we expect to return to a modest net cash
position at year end.
Enquiries
Hays plc Group Finance Director
James Hilton
Head of Investor Relations & ESG
Kean Marden +44 (0) 203 978 2520
+44 (0) 333 010 7092
FGS Global
Guy Lamming / Anjali Unnikrishnan / Richard Crowley
hays@fgsglobal.com
( )
The person responsible for releasing this announcement is Rachel Ford, General
Counsel & Company Secretary.
( )
Conference call
James Hilton and Kean Marden will conduct a conference call for analysts and investors at 9:00am United Kingdom time on 16th April 2025. Participants are invited to register via the URL link below:
https://register-conf.media-server.com/register/BI3d348bf94af843f29f36731e0c34869d
(https://url.uk.m.mimecastprotect.com/s/v-fwCL7ZRIR400DpIBflUyd9Ne?domain=register-conf.media-server.com)
Once registered, you will receive a confirmation email, with the details of the call and a personal login link and PIN which will place you directly into the call, without the need to speak to an operator. The call will be recorded and will also be available for playback via
the results centre on our investor website (https://www.haysplc.com/investors/results-centre)
.
Reporting calendar
Trading update for the quarter ending 30 June 2025 (Q4 FY25) 11 July 2025
Preliminary results for the year ending 30 June 2025 21 August 2025
Trading update for the quarter ending 30 September 2025 (Q1 FY26) 14 October 2025
Hays Group overview
As at 31 March 2025, Hays had c.9,900 employees in 226 offices in 33
countries. In many of our global markets, the vast majority of professional
and skilled recruitment is still done in-house, with minimal outsourcing to
recruitment agencies, which presents substantial long-term structural growth
opportunities. This has been a key driver of the diversification and
internationalisation of the Group, with the International business
representing 80% of the Group's net fees in Q3 FY25, compared with 25% in
FY05.
Our consultants work in a broad range of industries covering recruitment in 21
professional and skilled specialisms. Our four largest specialisms of
Technology (24% of Group net fees), Accountancy & Finance (16%),
Engineering (11%) and Construction & Property (11%) collectively
represented c.62% of Group fees in Q3 FY25.
In addition to our international and sectoral diversification, in Q3 FY25 the
Group's net fees were generated 62% from temporary and 38% from permanent
placement markets. This well-diversified business model continues to be a key
driver of the Group's financial performance.
Purpose, Net Zero, Equity and our Communities
Our purpose is to benefit society by investing in lifelong partnerships that
empower people and organisations to succeed, creating opportunities and
improving lives. Becoming lifelong partners to millions of people and
thousands of organisations also helps to make our business sustainable. Our
core company value is that we should always strive to 'do the right thing' by
acting in the best interests of our candidates, clients, colleagues and
communities. Linked to this and our commitment to Environmental, Social &
Governance (ESG) matters, Hays has shaped its Sustainability Framework around
the United Nations Sustainable Development Goals (UNSDG's), and further
details can be found on pages 48-78 of our FY24 Annual report
(https://www.haysplc.com/investors/annual-report-2024) .
Cautionary statement
This Quarterly Update (the "Report") has been prepared in accordance with the
Disclosure Guidance and Transparency Rules of the UK Financial Conduct
Authority and is not audited. No representation or warranty, express or
implied, is or will be made in relation to the accuracy, fairness or
completeness of the information or opinions contained in this Report.
Statements in this Report reflect the knowledge and information available at
the time of its preparation. Certain statements included or incorporated by
reference within this Report may constitute "forward-looking statements" in
respect of the Group's operations, performance, prospects and/or financial
condition. By their nature, forward-looking statements involve a number of
risks, uncertainties and assumptions and actual results or events may differ
materially from those expressed or implied by those statements. Accordingly,
no assurance can be given that any particular expectation will be met and
reliance shall not be placed on any forward-looking statement. Additionally,
forward-looking statements regarding past trends or activities shall not be
taken as a representation that such trends or activities will continue in the
future. The information contained in this Report is subject to change without
notice and no responsibility or obligation is accepted to update or revise any
forward-looking statement resulting from new information, future events or
otherwise. Nothing in this Report shall be construed as a profit forecast.
This Report does not constitute or form part of any offer or invitation to
sell, or any solicitation of any offer to purchase or subscribe for any shares
in the Company, nor shall it or any part of it or the fact of its distribution
form the basis of, or be relied on in connection with, any contract or
commitment or investment decisions relating thereto, nor does it constitute a
recommendation regarding the shares of the Company or any invitation or
inducement to engage in investment activity under section 21 of the Financial
Services and Markets Act 2000. Past performance cannot be relied upon as a
guide to future performance. Liability arising from anything in this Report
shall be governed by English Law, and neither the Company nor any of its
affiliates, advisors or representatives shall have any liability whatsoever
(in negligence or otherwise) for any loss howsoever arising from any use of
this Report or its contents or otherwise arising in connection with this
Report. Nothing in this Report shall exclude any liability under applicable
laws that cannot be excluded in accordance with such laws.
LEI code: 213800QC8AWD4BO8TH08
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