The Board of Harvey Nash has reported that the Group’s trading for the 3 months to 31st October has been ahead of Management expectations, mainly driven by increased revenues and profits in the UK and Ireland, temporary and contract recruitment in Northern Europe, and an improving result from Asia.
Revenue and gross profit for the quarter ended 31st October 2012 increased by 10% and 5% respectively when compared to the same period in 2011. Operating profit increased by 7% before higher interest costs in relation to increased working capital requirements resulted in profit before tax being 3% ahead of the previous year.
The increased profit includes continued investment in the Group’s two new offices in Asia Pacific and an office in Europe opened in the first quarter of the year.
Geographic split and market conditions
In the USA, gross profit was up 14%. Whilst the election and so-called 'fiscal cliff' has resulted in a short-term pause in the market, the business reports an on-going recovery in demand confirming macro-economic trend indicators, which are increasingly turning positive.
Despite the widely reported slowdown in Europe, which has affected senior executive recruitment and reduced revenues from outsourcing, the impact has mostly been offset by an increase in contract recruitment. Accordingly, overall gross profit is lower by 5% compared to 2011 but with continued robust contract recruitment demand particularly in the Benelux and Germany, the result for the year is likely to be better than our previous expectations.
In the UK and Ireland, gross profit was up 10% on the same period last year driven by increased turnover in managed services and offshoring. Whilst permanent recruitment is slightly subdued at 4% below the same period last year, outsourcing is up 40% and contractor numbers are up 19%.
The Group’s new offices in Hong Kong and Sydney are making good progress and integration of the Talent IT business in Belgium, acquired in May of this year, remains on track.
Albert Ellis, Chief Executive of Harvey Nash, commented: 'The new digital economy continues to provide forward momentum in what is a lacklustre overall recruitment market. Skills shortages in the mobile and digital sectors have appeared just as consumers have migrated their spending online and are buying smartphones in record numbers.
'The economic uncertainty throughout the world has meant that clients have tended to favour flexible contract and temporary hiring above permanent recruitment. In addition, much of the increased demand is for specialist software engineers to design and deliver mobile and web based commercial applications. All of these factors favour the portfolio of services we offer.
I am pleased that a sharp strategic focus in these areas has increased the Group’s revenues in each of the three quarters so far this year resulting in good growth in underlying like for like profits and a further 10% increase in the dividend. We look forward to the future with confidence'.