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Hays’ revenues increase as companies hire more temporary contracts and tenure decreases
- London-listed Hays failed to match its record first-quarter performance
- The growth was mainly driven by a record result in the largest market, Germany
- The economic uncertainty led to a modest decrease in the number of permanent appointments
Hays posted strong growth in the second quarter as companies ramped up hiring on temporary contracts.
While the FTSE 250 recruiter failed to top its record first-quarter performance, net fees were still up a healthy 11 percent, aided by a weaker pound and increased focus on the most valuable areas.
Hays noted a modest decline in permanent hires over the period, which he attributes to consumer and customer uncertainty, particularly in the US.
While fees in the fixed segment were up 7 percent, they grew faster in the staffing and contract business for the first time in seven quarters.
Boom time: Companies have responded to the tighter labor market by raising wages, which is a windfall for recruitment firms such as Hays
The like-for-like growth was mainly driven by a record result in the largest market, Germany, thanks to high volumes from contractors and soaring demand from the human resources, engineering, accountancy and finance sectors.
Eight other countries earned their best-ever fees for the group, as well as its technology specialty, despite widespread layoffs across the industry and an extremely strong comparative performance last year.
Since Covid-19 restrictions were eased in 2021, the recruitment industry has benefited from a resurgent work environment that has also suffered from a shortage of applicants across a range of disciplines.
Companies have responded to the tightening labor market by raising wages, which is a stroke of luck for agencies like Hays, whose income is usually based on the percentage of a successful candidate’s annual salary.
However, with central banks gradually raising interest rates to dampen price increases and consumers easing their spending habits, employers are more cautious about their hiring plans.
Nevertheless, CEO Alistair Cox said the structural trends impacting the job market put the company in a favorable position for further growth.
He told investors on Tuesday: “Our key markets continue to be characterized by acute skills shortages and wage inflation, and we are focused on further increasing fee margins while keeping a close eye on our overheads.
“I am confident that our highly experienced global management teams will continue to navigate the near-term macroeconomic challenges while taking advantage of the long-term opportunities that are so apparent.”
Operating profit for the six months ended December is expected to be £95m to £97m, slightly down on the same period last year, but the overall range is in line with the company’s expectations.
Last week, fellow UK recruiters PageGroup and Robert Walters both lowered their annual earnings forecasts due to the more challenging economic situation.
Hays shares closed trading 2.1 percent higher at 121.5p, making it one of the top ten gainers on the FTSE 250 Index.