Positive outlook consensus for Hays following share rise

Following recruitment company Hays' encouraging results this morning of two per cent like-for-like net fee growth, shares are up three per cent.

UK growth was up eight per cent, making it the strongest region for the company as growth remains broad-based and public sector strength (+21 per cent) continues longer than expected, held up by a record September in Education, and the public sector (+ four per cent) remains active. Construction and IT, both major specialisms, saw strong growth.

Analysts are all optimistic on the results:


For the second consecutive quarter, LFL net fee growth was better than expected... outpacing our estimate (0%) and company compiled consensus (-1%). Divisionally, the UK once again comfortably exceeded, the CEROW beat was more modest and, although Asia Pacific lagged, there are signs that Australia may be getting close to trough. An encouraging start to FY14E but this stage of the year our EPS estimates remain unchanged.


LFL net fee growth represent[s] a good improvement from the working-day adjusted growth of -1% in Q413 and -1% in Q313. Exit rates were stable at a group level with some regional differences, and Hays notes "improved momentum" in many locations, and an "improvement in trading conditions in several markets as the quarter progressed" (e.g. UK, Germany, Japan). Along with the encouraging trends seen in Q1 this bodes well for the outlook in our view, as markets generally appear to be strengthening. However, at this early point in FY14 we do not make any changes to estimates.

Goldman Sachs:

The tone of the outlook has become more positive with the company seeing stable conditions overall and clear opportunities for growth with improved momentum in many parts globally. 2Q exit rate was c.+2% vs. GS forecast of -0.3% in Q2 FY14.