Hays cautious on growth

RECRUITMENT giant Hays issued a cautious trading statement this morning with 'good growth' in each of its three main operating regions. Although the company has taken on more recruitment consultants and opened more offices to deal with an increase in business, it warned that beating previous years' growth figures would be tougher.

This is a view shares by some analysts in the City who believe that the UK recruitment market, while not running out of steam, is now operating at a more modest level.

Staffing reductions at some City banks and financial institutions and cuts elsewhere, in the civil service, the BBC and in manufacturing industry, have led to some more cautious predictions for the UK recruitment industry.

Hays finance director John Martin told This is Money that he was 'cautious by nature' but remained positive: 'There's no slowdown that we've seen but we've just sounded a note of caution that the 15% growth we achieved in the second half last year will be harder to beat. I don't have a crystal ball, we're seeing the same news as everyone else.'

In October Cheuvreux UK, part of French brokerage Credit Agricole Cheuvreux, said it had lowered its rating on Hays to 'sell' from 'buy', citing slower growth in the UK staffing market. The brokerage also lowered its share price target after the demerger of its mail business.

The cautious tone from Hays today came despite a period of sustained growth since January. Earlier this year it warned investors that it could face a write-down on Albion, a chemicals unit that was one of the last non-personnel businesses it was involved in.

Since then Hayes has embarked on a major share buy-back programme, committing itself to repurchasing at least £200m of its own shares. That process started in November and so far Hays has bought back 24.1m shares at a total cost of £29.3m. The buy-back will now continue into the close period which begins on 1 January. Hays will announce half-year results on 1 March.