August 30, 2018 / 6:44 AM / 3 months ago

UPDATE 2-Sluggish UK takes shine off earnings rise at recruiter Hays

* Shares down as much as 5 percent

* Hikes FY dividend, special dividend by 18 pct

* UK and Ireland net fees up 2 pct (Adds shares, comments, CEO comments)

By Justin George Varghese and Sangameswaran S

Aug 30 (Reuters) - Sluggish growth in net fees in Britain overshadowed strong overseas results and higher dividend payments from recruitment firm Hays on Thursday, as investors worried about the impact of Brexit on UK businesses.

Shares in the company fell as much as 5 percent, even though full-year earnings per share at the company - which now makes 80 percent of its profit outside the United Kingdom - beat analysts’ average forecast.

Hays is largely focused on white-collar roles, where some firms have been holding off on recruiting amid uncertainty over Britain’s trading relations with the European Union after it leaves the bloc in March 2019.

“I think it is understandable that people are taking time to think through their capital investment plans and I can’t see that it would change really until we’ve got clarity or some degree of clarity on what those relationships will be with the EU post Brexit,” Chief Executive Alistair Cox said.

“I don’t expect, in the immediate future, for all of that to become clear.”

Hays’ net fees in the United Kingdom and Ireland rose just 2 percent in the year ended June 30. However, operating profit there climbed 13 percent due to “good cost control”, it said.

Like other British recruiters, Hays has helped to offset challenges at home with growth abroad.

Its German business saw a 16 percent increase in net fees, while Australia and New Zealand recorded 14 percent growth.

Group-wide net fees climbed 12 percent to 1.07 billion pounds ($1.4 billion), while earnings per share rose 18 percent to 11.44 pence, beating analysts’ average forecast of 11.30 pence, according to Thomson Reuters I/B/E/S.

The company proposed an 18 percent rise in its special dividend to 5 pence per share, and declared a full-year core dividend of 3.81 pence a share, up from 3.22 pence a year earlier.

$1 = 0.7679 pounds Reporting by Justin George Varghese in Bengaluru; Editing by Patrick Graham and Mark Potter

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