Brexit jitters weigh on Hays

Hays, the UK recruiter with the highest market capitalisation, reported that operating profit for its UK and Ireland business fell 29 per cent in the second half of 2016, depressed by hiring jitters following the Brexit vote.

It said that permanent private sector hiring in the UK, comprising nearly three quarters of of net fees for that business, “saw a marked step-down in activity after the EU Referendum, but stabilised quickly and ended the half showing early signs of improvement”. London was worst hit, with net fees down 15 per cent compared to a 10 per cent drop for the UK as a whole.

The FTSE 250 company posted 16 per cent “actual growth” in overall operating profit for the second half of 2016, but a slight fall in like-for-like operating profits – down 1 per cent. Net fees were up just 3 per cent on a like-for-like basis, buoyed by “all-time record performances in Germany and France”.

Hays, which has operations in 33 countries, benefited from the weak pound, with exchange rates against the euro and Australian dollar in particular providing a £14.8m boost to operating profits.

It said consultant headcount ended December 2 per cent higher overall than the previous year – up to 6,606 consultants – although headcount in Asia and the UK fell, amid “more challenging market conditions, particularly in the banking sector” in Asia, and as “early pre-emptive action ahead of and in response to declining market conditions” in the UK.

Alistair Cox, Hays’ chief executive, said that conditions were “supportive in many key markets, especially Germany, our most profitable business, where we delivered another all-time record performance, and Australia where activity accelerated significantly through the half.”

“The vast majority of our markets remain positive”, he added.