Hays slumps as concern grows for future
RECRUITMENT and services firm Hays expressed concerns about the future of its fledgling postal business yesterday, as it posted an 8.5 per cent slump in half-year pre-tax profits to £115.1 million.
The company has been delivering mail to certain restricted postcodes for the past year through special temporary licences issued by postal regulator Postcomm.
But chairman Bob Lawson said the service, part of a trial of market deregulation, is now shrouded in “uncertainty”. He said: “If we can’t turn these interim licences into permanent licences soon, we will have to close it [the postal service] down in September when the current deal runs out.”
His comments follow reports that postal regulator Postcomm is planning to delay the deregulation of the postal market to minimise the impact on the current monopoly holder Consignia.
Lawson said Hays invested “a small number of millions” in the project and had was still hoping to become “a major player” in the deregulated postal service.
The firm recently launched door-to-door business deliveries in Edinburgh, Manchester and London, and has a more restricted service across other parts of the UK.
But he added that the fresh debate surrounding the deregulation of the postal market will add to the difficulties in luring customers to switch to an alternative provider.
Hays said its core personnel business, which accounts for 42 per cent of sales, was “holding up well”, despite the downturn in recruitment.
The division posted a 12 per cent fall in operating profits to £62 million, with its Australian and City of London operations most heavily hit.
Despite the firm’s expertise in the personnel market, Hays is still struggling to find a new chief executive to replace John Cole, who left the firm in June.
Lawson said there was a dearth of talent available for the job and the search had now been extended into Europe.
Hays said upgrades to its information management and document storage business, part of its commercial division, were taking longer than expected to affect the bottom line.
The division, which also includes the new postal service and accounts for around 20 per cent of sales, saw operating profit fall 6 per cent in the six months to 31 December.
Logistics, which accounts for around 37 per cent of sales, posted a 16 per cent drop in first-half operating profit.
Shares in the firm were one of the largest fallers in the FTSE 100 index, closing 11.4 per cent down at 184.25p.
