05 April 2017

Deligiannis returns Hays Australia to star status in Hays worldwide

In January 2015, when I was writing about the Hays global results from the previous financial year, featuring a stellar performance from Hays UK & Ireland and a resources-downturn induced slump for Hays Australia, I editorialised as follows:
 
In summary, it’s easy to conclude that the move of Nigel Heap, from running the Hays Asia Pacific business, to running the Hays UK & Ireland business has been a hugely successful one. The underperforming UK & Ireland business had its costs slashed (235 offices have now been reduced to just over 100) and revenue has improved, resulting in a dramatic 500 per cent profit turnaround in the two years of Heap’s stewardship.
 
Unfortunately, in the same two year period the Hays Asia Pacific business has slumped, with operating income down by nearly one third and operating profit nearly halved. The conversion rate in Asia Pacific, although down from 37.2% to 28.6% over the past two years, is still comfortably the best conversion rate within the Hays empire.
 
Of course, Heap has been the beneficiary of the UK’s vastly improved economic position while Heap’s successor in Australia/New Zealand, Nick Deligiannis, has had to contend with very subdued economic and recruitment activity over the same period after riding the recent mining and resources employment boom.
 
I am sure Hays Aus/NZ MD, Nick Deligiannis has been breathing much easier recently as his region produced outstanding six monthly results for the current financial year, contrasting sharply with the 10% decline in net fees and 29% drop in operating profit reported by Hays UK & Ireland, where Nigel Heap remains as MD.
 
The Asia Pacific region Conversion Rate (operating profit divided by net fees) jumped from 27.5% to 29.8% which, again, contrasted significantly with the UK & Ireland Conversion Rate of 14.4%, down from 18.1% the previous year, indicating significantly lower consultant productivity.
 
As a result of the most recent financial data released by Hays (June – December 2016 half year results), published on 22 February 2017, I decided to dig down into the data to see what I could extract of interest re local results.
 
The financial data I have listed below is my estimate, as separate reporting of the two countries is not publicly provided by Hays. The year listed is the financial year ie 1 July (the previous year) until 30 June (of the year listed).
 
All numbers for the combined Australia and New Zealand operations are an approximation based on information provided in the Hays Plc Annual Reports (Asia Pacific Region) and other public releases of Hays’ financial data as reported by industry news service ShortList.

Key Indicator
2017*
2016
2015
2014
Net fees^
AUD $million (i)
302
279
270
255
Operating profit AUD $million
114
99
91
81
Consultant headcount #
870
814
775
705

* 2017 results and consultant headcount represent my estimate based on the July – December 2016 half year results
 
^ net fees is the aggregation of permanent placement revenue and net temp/contractor margin
 
(i) represents the AUD$/GBP£ exchange rate used in the Hays public release of Australia & New Zealand half year results each year
 
# calculated on consultant headcount data changes as listed in the Hays Annual Report using the reference point of the Aus & NZ combined headcount of 706, as at 30 June 2010 (ShortList, 3 September 2010).
 
Here’s a summary of the commentary provided by Hays in the release of their half year results. The same period last year (July – December 2015) is the reference point used when changes from previous data are referenced. 
  • Aus & NZ net fees were up 9% and operating profit was up 16%
  • Perm business was up 6% and Temp, which represented 66% of net fees in the half, grew by 11%
  • Australia’s net fee growth accelerated 11% whereas net fees in New Zealand were down 8%
  • Australian private sector net fees were up 10% and public sector rose 12%
  • New South Wales was up 14% and Victoria rose 15% and Canberra increased 13%. Queensland and South Australia both delivered 9% fee growth
  • Construction & Property, the largest Hays Australia specialism, grew 12% and IT jumped 22%
Hays Australia returning to substantial growth is an excellent lead indicator for the health of the local recruitment industry. It certainly augurs well for an excellent rest of 2017.
 
No doubt Nick Deligiannis looks forward to any conversations with his boss, and long-time mentor, Hays Asia Pacific Chairman, Nigel Heap. It's just that these days Deligiannis might just, rightly, have a bit more spring in his step, after now definitively proving he is the rightful heir to his boss's old job.
 
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