Hays shares slump to 10-month low as growth slows

The shares of recruitment firm Hays fell to a 10-month low yesterday after a quarterly trading update showed a slowdown in net fee growth in its main domestic market, prompting some analysts to cut earnings forecasts.

Hays said underlying net fees in the UK and Ireland, which last year accounted for 36% of annual net fees, rose 6% in its first quarter, versus the 9% rate in the prior three months.

Shares in Hays, which places workers in finance, construction, and IT, fell to 136p (185c), the lowest since December, before paring their losses later in the day.

Analysts at UBS called the first quarter result in the UK disappointing: “Excluding an ‘exceptional’ education result in September, the public sector has seen increasing caution.”

Jefferies analysts said they would trim their earnings per share forecasts for Hays’s current financial year by 2%.

For the group as a whole, underlying net fee growth reached 8% in the first quarter, and the company said in a statement it had had a good start to the new financial year, with all three key businesses delivering further growth.

“The only area we’ve seen a bit of a slowdown is in public sector, which I think is to be expected a few months after the election as a number of authorities begin to focus on spending rounds,” said group finance director Paul Venables.