LONDON (Reuters) - British recruitment company Hays reported its first profit for five years in the UK and Ireland as the domestic jobs market begins to show signs of recovery.
Hays, which places workers in areas such as finance, construction and IT, said that cost cuts and a second-half rebound in fees helped it swing to a 5.6 million pound ($8.7 million) full-year operating profit in its home market, against a 6.5 million pound loss in the same period last year.
“It has been a tough market in the UK for five years, but we’re definitely seeing signs of recovery in the UK ... it’s quite widespread by region and it’s quite widespread by industry,” Chief Executive Alistair Cox said on Thursday, adding that fourth-quarter fees rose 14 percent in the construction and property sector - the first pick-up since 2008.
This supported evidence from surveys published in July, which showed that temporary placements in Britain rose sharply in June, with permanent job placements increasing at their fastest pace in two years as wages and employer confidence rose.
Employers in Europe have been reticent over hiring better qualified staff on permanent contracts. Rival PageGroup, which mostly relies on permanent placements, reported a 5 percent fall in first-half gross profit this month.
Hays has bucked this trend by widening its exposure to the growing temping market. Its fees for temporary workers rose 3 percent to 423 million pounds.
Unemployment in the euro zone fell for the first time in more than two years in June, the EU’s statistics agency Eurostat said, signalling that the bloc’s economy may be pulling out of recession.
Germany, Hays’ largest European business, reported a 13 percent rise in fees, the main driver behind a 25 percent increase in like-for-like operating profit in Continental Europe, Latin America and North America.
Overall, Hays’ pretax profit declined 3 percent to 118.5 million pounds ($184 million) as stronger employment markets in Europe, Latin America and North America failed to offset a 13 percent decline in Asia Pacific fees. Like-for-like net fees fell 1 percent to 719 million pounds in the year to June 30.
Fees fell 16 percent in Australia, Hays’ core Asian business, hit mainly by fragility in the mining and resources sector in western Australia and Queensland.
The company said it expects market conditions to remain mixed in 2014.
“(Outlook comments) have become slightly more optimistic in tone as market conditions are no longer referred to as ‘fragile’. The new adjective ‘mixed’ can hardly be considered upbeat, but management have clearly become more optimistic regarding UK momentum in recent months,” said Jefferies analyst Kean Marden, reiterating a “buy” rating on the stock.
Hays’ shares were down 0.7 percent at 0945 GMT (10.45 a.m. British time).
Editing by Rhys Jones and David Goodman