Hays sees rise in operating profit after strong third quarter

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LONDON, April 10 (Reuters) - British recruitment group Hays said it expected to see an improvement in second-half operating profit after reporting an underlying 8 percent rise in third-quarter net fees, reflecting strong demand in Britain, continental Europe and Asia.

The company, which places workers in areas such as finance, construction and IT, said it expected second-half operating profit to be slightly ahead of its first half level of 81.5 million pounds ($120 million).

"We expect to drive strong profits this year and we expect the second-half profits to be ahead of the first-half profit, which would mean that our like-for-like profitability would be up by 25 percent or more," Chief Financial Officer Paul Venables told Reuters.

However shares in the company fell by more than 6 percent in early trading after it reported a slowdown in UK net fee growth ahead of national elections in May, as companies held back on hiring decisions.

"In any market that we are in the world, if we are in a general election, our growth tends to slow in the three months coming to that election and if you get a clear outcome and then growth re-accelerates," Venables said.

Shares (Berlin: DI6.BE - news) in Hays (LSE: HAS.L - news) were down 4.8 percent at 155 pence by 0718 GMT, making it one of the biggest fallers in the FTSE 250 index of mid-sized companies.

"Third-quarter growth was slightly below consensus due to more cautious decision-making ahead of the UK general election and consequently we downgrade full-year estimates earnings per share by 1 percent," said Jefferies analysts, who have a "buy" rating on the stock.

Hays reported growth in all of its regions, with France, China, the United States and Japan all reporting net fee growth of more than 10 percent. It also raised its consultant headcount by 3 percent in the third quarter.

The company also reported the number of permanent job placements grew by 11 percent in the third quarter, on a like-for-like basis, while temporary placements grew 6 percent. ($1 = 0.6809 pounds) (Reporting by Li-mei Hoang; Editing by Kate Holton and David Holmes)