Further signs of growth in the UK jobs market has come from recruitment group Hays.
The company reported a 7% rise in fees in the UK and Ireland during the fourth quarter, the first increase for two years, albeit helped by extra trading days. It told Reuters it was seeing signs of a more broad-based recovery.
Overall, Hays fees rose 1%, better than forecast and driven by the strong UK performance as well as good results from continental Europe, notably Germany and France.
As a consequence, the company said its full year operating profit was likely to be at the top end of current market expectations. But chief executive Alistair Cox warned:
Looking ahead, we expect continued fragile and mixed conditions. Several markets are likely to remain challenging and these will sit alongside clear opportunities for growth.
Hays shares are 3.85p higher at 98.85p after the update. Canaccord Genuity said:
This is a strong performance and as a result management have indicated that profit is likely to be at the top of the consensus range, around 3% above our estimate. We anticipate that we will be modestly upgrading current year profit estimates given some uncertainty over international trends. Nevertheless the sequential growth in the UK increases our confidence that forecast risk is to the upside. As we have previously commented, cost reduction initiatives means the conversion ratio (rate at which net fee growth converts into earnings before interest and tax) on any future growth is likely to be around 75%.
