Harvey Nash's slow start continues, upturn eyed

31st May 2013 09:17

Recruitment group Harvey Nash continued its slow start to the year, with first quarter operating profits 14 per cent below last year's despite some 'encouraging signs'.The FTSE Fledgling blamed the timing of the Chinese New Year holiday falling inside the period as well as client delays at its German outsourcing business.These factors negated a 12% rise in revenues in the first quarter of the new financial year and a 7.0% increase in gross profit. With previously announced plans to align costs with revenues in the German business, the company said temporary recruitment remained robust elsewhere in the UK and Europe, even seeing a "slight pick-up" in executive recruitment. The US market was reported to have also picked up and towards the end of the quarter Harvey Nash said it saw "encouraging signs of gradually increasing trading momentum" across its business to lift April's operating profit above the previous year's.Broker Panmure Gordon said both gross and operating profit movements were well below its full year assumptions, and so it expected cost reductions as a result.Analyst Paul Jones observed that as the recruitment markets were showing some general signs of improvement, "attention to the cost base and a growing element of outsourcing business should ensure that the current year is at least as good in profit terms as last despite a weak Q1 which now gives it something to chase to hit FY expectations". In his opinion, growth in Temp recruitment underlined the "lack of solid confidence in recruitment markets as a whole" and he believed the group remained "better placed than most as a result, and some early signs of increased momentum in the market can only be good news".Shares in Harvey Nash were down 1.4% to 70p at 09:40 on Friday.OH