Hays looks to Europe for recruitment growth as UK slows

(Releads, adds CFO comments, background, share price)

By Li-mei Hoang

LONDON, Jan 13 (Reuters) - Recruitment company Hays expects economic recovery in the euro zone to boost demand for its services in 2016, helping offset a slowdown in markets such as Britain and Australia.

Hays (LSE: HAS.L - news) , which is now the largest white collar recruiter in Europe, said it was benefiting from a relatively new outsourcing market in Europe where companies are only just starting to turn to recruitment companies to find candidates for jobs.

The European Union's statistics office released data last week showing unemployment had fallen to 10.5 percent November in the 19 countries which share the euro currency, this was down from 11.5 percent a year earlier.

Hays, which places workers in areas such as finance, construction and IT (Other OTC: ITGL - news) , said on Tuesday it had seen strong demand from Germany and France in the second quarter and its businesses in Spain and Portugal has also grown significantly.

That helped Hays post an underlying 7 percent rise in quarterly net fees, in line with market expectations, easing concerns over slower growth in the UK, its home market.

"We've had a number of ups in Europe. Europe is our largest region, so growing that at 16 percent is a big positive," Chief Financial Officer Paul Venables told Reuters.

"But clearly the UK is a bit slower," he said, adding this was due to clients in the public sector adjusting to new budgets following last year's change of government.

The UK and Ireland (Other OTC: IRLD - news) , which account for 35 percent of the group's net fees, slowed to just 1 percent, compared to 6 percent in its first quarter.

Hays, which operates in 33 countries, said permanent placements grew by 7 percent in the second quarter, at constant exchange rates. Temporary placements were also up by 7 percent.

Shares (Berlin: DI6.BE - news) in the company climbed more than 4 percent in early trading, and were 2.3 percent higher at 124 pence by 0835 GMT.

"This looks better than some may have feared and we expect growth trends to stabilise in the coming six months," UBS analysts said in a note.

"The market is volatile but recession unlikely in our view, and we reiterate our Buy rating." (Editing by Alexander Smith)