Hays says continued growth could bring bigger payouts

By Esha Vaish

(Reuters) - UK-based international recruitment company Hays Plc (HAYS.L) expects to be able to start making special dividend payouts from next year, as strong growth across Europe gave it a 12th consecutive quarter of year-on-year rises in fees.

The company also said it expected market forecasts for operating profits for the year ending in June to move up from the current consensus of 177 million pounds after reporting a like-for-like 4 percent rise in net fees in the last three months.

Hays shares were up 9 percent at 135.1 pence by 1020 GMT, making the stock the biggest gainer in the Stoxx Europe 600 index .

"We had 20 countries growing by more than 10 percent and I'd expect in the next quarter we'd have a similar 20 or so countries growing by 10 percent and that's the benefit of a diversified group," Finance Director Paul Venables told Reuters.

He forecast good growth in current fourth quarter, in European markets such as Germany and France as well as the United States.

UBS raised its operating profit forecast to 179 million pounds from 175 million for the year ending June 30, factoring in smaller than previously expected impact from the movements in the euro (EURGBP=) and the Australian dollar (AUDGBP=) against the pound.

Hays, which places workers in areas such as finance, construction and IT, posted a comparable profit of about 164 million pounds in the last financial year.

The expectations of another strong year puts Hays on a path to start distributing surplus cash via special payouts.

Venables said Hays was likely to be able to start paying special dividends from next year, adding that analysts' expectations of yearly payouts of about 100 million pounds were "definitely possible".

Dividends paid on results for the year ended June 2015 totalled 37.9 million pounds.

GEOGRAPHICALLY DIVERSE

Recruiters such as Hays, Michael Page (MPI.L) and Robert Walters (RWA.L) are often seen as economic bellwethers because people tend to switch jobs more often when confidence levels rise.

Hays, which operates across 33 countries, posted an underlying rise of 4 percent in net fees in its third quarter ended last month, as strength in continental Europe markets and the United States offset a weaker UK.

"As a result of its balanced geographic and discipline exposures we see Hays as offering investors a relatively defensive way of gaining exposure to the recruitment sector," Liberum analysts wrote in a note, reiterating their "buy" rating on the stock.

However, fees in Hay's UK & Ireland business fell 3 percent, as clients remained cautious on staffing in the run-up to the UK referendum due to be held on June 23 on whether the country should remain a member of the European Union.

Venables predicted a similar fall in fees in the fourth quarter in the UK, which accounts for more than a third of the business.

Earlier this week, Michael Page and Robert Walters also posted slower rates of growth in the UK.

(Reporting by Esha Vaish in Bengaluru; editing by Jason Neely, Greg Mahlich)