DIFFICULT conditions in the banking and construction sectors saw recruitment firm Hays’ net UK fees slump by nearly a tenth.
But the global firm, which operates in 33 countries and employs 7,800 people worldwide, reported it had offset the problems with its UK market with better performances around the world, including a record result in Germany.
Although UK net fees fell by nine per cent in the firm’s first quarter to September 30, the strength of its performance in other markets, where it does nearly 70 per cent of its business, meant the company overall saw net fees fall by only one per cent – far better than the City feared.
Although Australia and New Zealand fell nine per cent, and Asia by six per cent, results were much better in the Continental Europe and “Rest of World” division, which grew by 16 per cent.
The European growth was largely thanks to a record 25 per cent growth in Germany, which now accounts for a fifth of the group’s business.
Hays chief Alistair Cox said it was a stable first quarter, following a tough previous year when its UK business swung into the red with a £6.5m loss after seeing net income drop seven per cent.
“Several parts of the group continued to deliver good growth, with 15 countries delivering net fee growth of ten per cent or more,” he said.
“Among these were Germany, which is operating at record levels, Brazil, Canada and Japan. In contrast, certain markets, notably the UK, parts of Asia and southern Europe, were most difficult.
“Looking ahead, we expect this multi-speed environment to continue and while overall conditions remain challenging, and some markets are very tough, opportunities for growth exist in many key parts of our business.”
Staff cuts throughout the City have impacted Hays as groups such as Lloyds Banking Group and Royal Bank of Scotland have slashed thousands of jobs since the financial crisis, while the recession has also impacted the construction and property sectors.
Private sector net fees fell by 14 per cent in the UK and Ireland, although Hays said “job churn” saw public sector fees rise ten per cent.
Hays has been cutting costs to counter the difficult UK conditions and confirmed its UK and Ireland consultant workforce was 12 per cent down year-on-year.
Earlier this week, Michael Page also reported back on a hard-hit British market, revealing a five per cent drop in UK profits to £29.5m for its third quarter as the double dip recession takes its toll.
It added that operating profits for the financial year were expected to be slightly below City forecasts and that trading would remain tough.
There were also record performances in Belgium and Brazil.
Caroline de La Soujeole, analyst at Seymour Pierce, said the update was encouraging and showed Hays was outperforming Michael Page.