Hays expects FY operating profit ahead of market views

For the three months ended 30 June, the FTSE 250 recruitment firm reported total net fee growth of 12% on a headline basis, with like-for-like growth of 8%. Consensus expectations were for 4.5% growth.

Continental Europe and Rest of World saw the biggest growth at 29%, while Asia Pacific saw 7% growth. However, net fee income in the UK & Ireland slipped 3% as public sector markets remained tough and client sentiment weakened towards the end of the quarter in the run-up to the EU referendum.

Chief executive Alistair Cox said: “We delivered a good performance to end our financial year and expect full year profits to be ahead of current market expectations. We have also achieved our goal of eliminating the group's net debt. Europe delivered further excellent growth, benefiting from all-time record performances in Germany and France, among 13 European countries to grow by over 20%).

“Looking ahead, conditions in most international markets remain supportive and although there is significantly increased uncertainty in the UK, it is too early to say how the result of the referendum will impact our results going forward.”

The company eliminated its net debt and had a year-end net cash position of around £40m versus net debt of £45m at 31 March 2016.

RBC Capital Markets said: “The stock has clearly been weak post Brexit – whilst there is clear uncertainty and permanent is likely to be tougher – this update is positive, currency is a help (£22m help to EBITA in 2017E) and the balance sheet is now net cash.

“We continue to see enough upside to our mid-cycle valuation to be positive, whilst the balance sheet and potential cash returns are supportive. We also see Hays as an attractive asset to the bigger players. We remain at outperform.”

At 0917 BST, Hays shares were up 7.4% to 115.94p.