Improving UK, Asian economies boost Hays first half profits

26th Feb 2014 07:58

- First half operating profits up 11%- Improved outlook in UK and Asia- Australia, Brazil still tough marketsImproving UK and Asian economies helped recruitment firm Hays post an 11 per cent rise in interim operating profits to an above-forecast 66.7m pounds.Business confidence in the UK is improving "across all sectors and regions" in permanent and temporary employment sectors, the company said. this was reflected in a 9% increase in net fee income in the region contributing £9.4m to operating profit.Overall net fee income rose marginally to £363.4m from £360.3m in 2012. The company said conditions in Brazil and Australia continued to be "challenging" and the group was moving quickly to slash costs in those regions.Broker Jefferies rated Hays stock a "buy" and raised its price target to 159p from 148p. It upgraded its 2014 full year earnings per share estimate by 4%.Pre-tax profits rose to £62.5m from £56.7m and earnings per share were up 19% to 2.90p. Hays said its financial numbers remained sensitive to exchange rate movements in key currencies, notably the Australian dollar, which would have resulted in a hit to operating profits of £3m if retranslated at current rates.Pattern change in UK employment trendsChief Financial Officer Paul Venables said the it was the first time in two years that Hays had seen growth in both permanent and temporary hiring in the UK."The UK and parts of Europe are much stronger against a difficult backdrop in the past four or five years. I think we are a musical chairs business. People have to be confident enough to change jobs. I think it (growth) is sustainable," he told Bloomberg TV."Our clients now, if they lose an individual from the business, they replace them immediately."Venables said he expected conditions in Hays' Australian market to "bottom" out in the next three to four months and then forecast a slow pick up in the banking, retail and manufacturing sectors.Chief Executive Alistair Cox said the company moved into the second half with "clear momentum in several key markets".The dividend was unchanged at 0.83p a share.FP