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UPDATE 2-Hays looks to strong resource and IT markets in 2012
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Industrials »
Wed Feb 22, 2012 6:46am EST
* Interim dividend cut 55 pct to 0.83P
* H1 pretax profit up 24 pct to 60.3 mln stg
* Difficult trading conditions in several markets
* IT and resource-based markets booming
* Shares rise 9 pct
By Neil Maidment
LONDON, Feb 22 (Reuters) - British recruitment firm Hays said it is encouraged by a strong start to 2012 in booming resource and IT markets as it credited its diverse market spread for helping to boost first-half profits by 24 percent in tough economic times.
Hays, which specialises in placing workers in accountancy, IT and construction jobs, also said on Wednesday that it was halving its dividend to a "more appropriate" level in light of slowing growth seen at the end of last year, a move seen as prudent by analysts.
The company posted a 24 percent rise in pretax profit for the six months to end-December of 60.3 million pounds ($95.39 million), underpinned by overseas operations which account for almost 70 percent of group fees.
After late 2011 saw net fees drop from 15 percent growth in the company's first quarter to 8 percent in its second on economic concerns, Hays said 2012 had begun well with record numbers of temporary jobs in its buoyant German and Australian markets in particular, where IT, engineering and resource-based jobs are in demand.
Like many of its rivals, though, Hays said financial services continued to lag as confidence among clients to hire, and among candidates to consider moving jobs, is dampened by economic uncertainty, while parts of southern Europe like Portugal were also struggling.
In response to some markets' challenging conditions, the firm said it would reduce its interim dividend by 55 percent to 83 pence -- viewed as a prudent move by analysts.
"The dividend has been an issue for the group for some time and today it has decided to bite the bullet and cut it," Investec analyst Robert Morton wrote. He estimated a 250 pence full-year dividend, compared to 580 pence in 2011, and maintained his buy rating.
Hays said it remained committed to paying a meaningful dividend.
"Given the slowing of our profit growth in the half and our current view on the likely growth rate of group profitability in the current uncertain economic environment, we have decided to rebase the dividend to a level that is more appropriately covered by current earnings and cash flow," the firm said.
Shares in the FTSE 250 firm were up 9 percent to 88.375 pence at 1125 GMT.
"Sentiment on the global economic outlook has improved recently and, whilst we are not changing our pretax forecast for this year, we are edging up our forecast for next year," Investec's Morton added.
NO ONE TRICK PONY
Chief Executive Alistair Cox told reporters the group's diversity by geography and by sector was a big advantage.
"If we were just a one trick pony operating purely in financial services then we'd have a problem, but we are in all these other markets, some of which are enjoying the most exceptional growth that they've ever witnessed, like commodities," he said.
First-half net fees, or gross profit, rose by 16 percent on a like-for-like basis in its Asia Pacific region, led by its core Australian resources and mining markets where candidate shortages are high.
Continental Europe and the rest of the world increased by 27 percent helped by a record performance in Germany, the region's largest market. Tough times continued in the UK, however, where fees dropped 6 percent to a operating loss of 3.1 million pounds as private sector markets dipped alongside a weak public sector.
Hays, whose customers include Siemens in the UK and Tate & Lyle in Europe, said 15 million pounds of savings had been earmarked in its back office UK operations, having already closed 12 offices in the period.
Investment in fast-growing overseas markets would continue, said the firm, which has seen its international exposure rise to 69 percent from around 15 percent 10 years ago. In the past year the firm has opened more offices in Germany, China and Colombia and will move into Chile and Malaysia in 2012.
Last month rival Michael Page reported a continued slowdown in profit but said it would open offices in three new countries in 2012 as it goes in search of better prospects in emerging markets.