Hays presses for guidance on post
Hays yesterdaycalled on the postal regulator to press ahead with its plan to end Consignia’s monopoly on bulk mail.
It also urged Postcomm to grant the support services group permanent licences for its mail services.
Bob Lawson, chairman and acting chief executive, saidthe group, which was awarded threeinterim mail licenses in September,needed certainty on how the marketwould develop over the next one-to-three years.
“The best thing we could get out of the regulatory review now is the licences being put on a firmer footing.”
Mr Lawson said the interim status of Hays’ licences wasdeterring potential customers from switching suppliers. He also predicted a period of “slow evolution” for the mail market.
The postal regulator is expected to produce a decision document in April on promoting postal competition and clarifying the licences. Mr Lawson said a delay in the implementation of competition would be tolerable as “it is going to be a long haul anyway”.
But if Postcomm delayed publishing its conclusions then this would create significant uncertainty.
The group, which issued a profit warning last June, said the logistics market would remain competitive in the second half. A reorganisation of Hays’ information management business would reduce full-year operating profits by at least Pounds 3m.
The comments, which some analysts interpreted as a veiled profits warning, sent the shares 11 per cent lower to 186p.
UBS Warburg, the company’s broker, expects to reduce its forecast full-year profits before goodwill amortisation and exceptional items from Pounds 242.6m to about Pounds 229m.
Mr Lawson also revealed that its search for a chief executive was progressing “essentially not well”.
Ater coming close to making an appointment after going through two firms of headhunters and several shortlists, he said the company had resumed its search in both the UK and Europe.
Pre-tax profits fell from Pounds 121m to Pounds 103m in the six months to December 31.
This was driven by a 13 per cent fall in profit from the personnel division to Pounds 59.1m, difficulties in the logistics sector, primarily in the delivery of shopfittings to UK retailers and a Pounds 1.5m negative impact on operating profit from the reorganisation of the information management business.
Overall turnover fell from Pounds 1.26bn to Pounds 1.2bn.
An interim dividend of 1.52p (1.32p) is payable from earnings per share of 3.94p (4.76p).
Comment
* Hays has let the market down again by being caught out by its non-cyclical businesses. And while there may be some signs of stabilisation in personnel, this division is not yet out of the woods. After a rally in the autumn, the shares are now trading on a forward p/e of just under 20. This is approaching the levels where buying into a recovery looks attractive. This is unlikely to come through in the short-term but Hays will be well-placed for a recovery in the personnel sector, while the appointment of a chief executive could be the catalyst for a break-up.
Page 24; Edition London Ed1; Section COMPANIES & FINANCE UK
Copyright 2002: Financial Times Group
