Investors give thumbs down to Hays new CEO

LONDON, Sept 24 (Reuters) – British recruitment and logistics firm Hays Plc (LSE: HAS.L – news – msgs) finally named a new chief executive on Tuesday after an 18-month search, but investors dumped the stock, saying the new boss lacked
experience.
Colin Matthews, who runs Britain’s gas pipeline network for utility Lattice Group (LSE: LAT.L – news – msgs) , is due to take over the top job at Hays from November 1. He will be taking up his first assignment as chief executive of a FTSE 100 company.
Shares in Hays fell nearly 12 percent to 108 pence, making it the day’s second biggest loser in the blue chip index.
The shares recovered slightly to end 7.14 percent down at 113-3/4 pence, faring much worse than the FTSE 100, which closed 1.8 percent down.
“It’s a huge anticlimax; he’s not a big hitter,” said Kevin Lapwood, analyst at ING Barings.
“The company has procrastinated for over 18 months. We were led to believe that they were headhunting a chief executive. He (Matthews) has never held that sort of post. It’s not what the market wanted,” said Lapwood.
Hays, which counts Deutsche Bank (Xetra: 514000.DE – news) , JP Morgan Chase and supermarket group Sainsbury (LSE: SBRY.L – news – msgs) among its customers, has been without a full-time chief executive since June last year when John Coles stepped down shortly after warning investors that logistics profits would be significantly below expectations.
Chairman Bob Lawson has been acting CEO since then.
Some analysts have long argued that Hays needs to shed one or more of its four main divisions — recruitment, logistics, commercial and mail delivery — to improve focus, and the lack of a chief executive has been seen as a delay to this process.
But the appointment of Matthews, who played a key role in the recent merger agreement between Lattice and bulk electricity distributor National Grid Group Plc and has never led a FTSE 100 company, did not seem to them the perfect fit.

BENEFIT OF DOUBT

Some analysts were still willing to give Matthews, 46, a graduate of French management school Insead and a former strategy consultant with Bain and Co, the benefit of the doubt.
“Matthews has a good CV. But it’s still early days to pass judgement,” said an analyst with a British brokerage, who asked not to named.
Before joining Lattice, Matthews held senior management positions at British Airways (LSE: BAY.L – news – msgs) and General Electric Co (NYSE: GE – news) .
“What is now key is the strategic direction of the company going forward,” added Trisha Reay, analyst at Teather & Greenwood.
Ironically, the long-awaited appointment came earlier than the market had expected. Hays had said this month that it would name the new boss by November when it holds its annual shareholders meeting.
Hays reported a 14.5 percent fall in profits for the year to end-June, with both its key divisions — recruitment and logistics — posting lower profits than the previous year.