Hays rallies on renewed break-up hopes
Colin Matthews, the new chief executive of Hays, yesterday signalled he might break up the support services group.
Mr Matthews, who has been in the job three weeks, told the annual meeting that a strategy review would lead to changes. “We will not be defending the status quo.”
His comments helped to lift the shares 8 per cent to 89?p.
Analysts had been concerned that Mr Matthews, who came from Transco where he was managing director, would run the company in its existing form, rather than pursue a break-up. The group’s activities span logistics, personnel and commercial.
However, at the time of his appointment, former colleagues insisted he would not shirk difficult decisions and pointed out that before his stint at Transco, he restructured operations at British Airways.
Calls for Hays to focus on one core activity emerged after a profits warning in June 2001 broke an unblemished track record.
At the beginning of this month, Hays again said it would miss its full-year targets, this time blaming a delay in the award of mail licences that meant it could not respond to Royal Mail’s aggressive targeting of some of its businesses.
Adrian Cattley, at Schroders Salomon Smith Barney, said: “It has a range of services that don’t necessarily fit under one roof. The easiest way to realise some value would be to spin some off.
“It may be better in the long term to keep them, but that would be hard work for the management and the market clearly wants them to split the business up.”
However, Bob Lawson, chairman, has recently said the group should stay together and one analyst wondered how much sway he would hold over Mr Matthews.
The analyst said it was difficult to judge the mettle of the new chief executive as he was being kept away from analysts. “It is pretty unsatisfying that we can’t meet him until March.”
Mr Matthews also told investors that he had set up weekly meetings to monitor day-to-day operations.
Mr Cattley said this should help safeguard against a repeat of this month’s surprise warning.
He added that the sum of the parts of Hays was still above the current share price. “There is value there, it’s just a question of how it is realised.”
Meanwhile, Mr Lawson said the trading outlook remained unchanged from earlier this month. See Lombard
Hope at Hays
By Martin Dickson
Financial Times; Nov 21, 2002
At last, signs of a sensible strategy review at Hays, which has long resisted dismantling its wonky-looking “three legged stool” of personnel, logistics and commercial service. Colin Matthews, who has been chief executive for just three weeks, told yesterday’s annual meeting to expect “changes in the shape of the group”. It is a promising start. Roll on the details. [email protected]
