UK Hays puts mail division up for sale
Hays, the services group turning itself into a pure staff recruitment business, has put its profitable mail operations up for sale in a move bound to attract big European players such as Deutsche Post.
Colin Matthews, chief executive, who has raised GBP 355m from 11 disposals of commercial and logistics businesses, said: “We are today actively looking at all the options for mail, including a straight- forward sale, a demerger or a float: whatever route you can think of.”
The 20-year-old business, which made GBP 16.3m operating profit in the first half on GBP 65.5m turnover, is being put on the block at a time when German, Dutch and other operators are taking advantage of the phased liberalisation of Britain’s postal market to make substantial inroads into Royal Mail’s 300-year-old monopoly.
Mr Matthews, who has promised to return surplus cash – likely to be around GBP 300m – to shareholders as well as making selective acquisitions of domestic and overseas recruitment businesses, said he was in no rush to sell the British mail operation.
“We don’t need to do anything in a panic, and want to maximise the value for shareholders,” he said, refusing to set a timetable for the disposal. The mail business, which analysts estimate to be worth GBP 220m, has recently stabilised with the disposal of loss-making units and the launch of new business-to-business products under a new management team.
Mr Matthews is due to step down when the “transformation” programme, now two-thirds complete, is over.
Hays, which has its own collection and delivery unit, by passing Royal Mail’s network, handles 1m items of commercial mail a night in a market worth close to GBP 700m a year.
The group said profits in its core recruitment business were four times greater [at GBP 60m] than in mail, but conceded that it faced uncertain growth because of macroeconomic weakness in mainland Europe and the UK.
Denis Waxman, chief executive-elect, insisted that growth would come from ex pansion both on the European mainland, especially eastern Europe, Australia/ New Zealand and “further afield”.
Group first-half pre-tax earnings topped expectations at GBP 87.9m, while Deutsche Post, a possible predator for the mail business, yesterday reported flat 2003 earnings of EUR 3bn (GPB 2bn) and warned against hopes of beating the EUR 2bn profits in the core mail business this year.
