The Week Ahead: Updates due from Hays and PZ Cussons

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A quiet week for corporate results will provide investors with the chance to assess the state of the recruitment market when Hays posts an update.

Recruitment firm Hays is expected to show an easing in fees growth when it delivers an update on Friday, although overall trading remains robust.

Brokers at Numis forecast the group, which places workers in areas such as finance, construction and IT, will see its UK growth slow to around 10% in the third quarter, compared to a very strong 14% comparative a year ago.

At the time it reported UK quarterly growth at its strongest rate for six years as the job market began to expand. The firm added that seven of its regions delivered record monthly fees, including key businesses such as Germany, Canada and Japan.

Numis forecasts that the group, which employs more than 8,000 staff in 33 countries, will see third quarter sales slip to 9%, against 11% in the previous quarter again due to tougher comparatives.

In the six months to the end of December the UK grew by 13%, driven by strong performances from the IT sector, construction and property, and accounting and finance.

The group bought the majority of US IT recruitment firm Veredus for around £29million last December. Hays chief executive Alistair Cox said the move gave it “a significant platform in the world’s largest recruitment market.”

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Numis said it expects the strong pound to continue to impact the firm’s profits. At the group’s half year results published in February it said its £81.5m first half operating profit at current exchange rates, would have been reduced by around £5.5m.

But Numis added: “We believe that Hays continues to trade well on an underlying basis, with scope for cash returns over the medium term.”

Imperial Leather soap maker PZ Cussons is expected to reveal on Thursday that unrest in Nigeria, one of its most important countries, continues to hamper trading.

Falling oil prices, a weak currency, tensions with Muslim rebels in the North East and a new Government coming to power mean that the City is braced for weaker sales in Nigeria, which accounts for around 22% of the group’s profits.

By contrast brokers at HSBC expect its UK washing and bathing unit, which includes Original Source shower gels and shampoo and Carex hand wash, to post earnings of £39.5m this year at a very healthy 27% margin.

In the UK the business has been driven by innovation at its older brands such as Imperial Leather which has introduced Classic, Signature and Indulgence ranges over the last year over a range of prices.

In its beauty division the group said tanning brand St Tropez, promoted by supermodel Kate Moss, performed well with higher growth in the US and Australia offsetting the impact of tougher trading conditions in the UK.

However, the group said its half-year pre-tax profits to November 30 fell 8.2% to £43.7m, largely as a result of the range of problems it faces at its key Nigerian market.

At its half year results in January chairman Richard Harvey said this month’s presidential elections and potential further currency volatility would be “a key contributing factor to the overall result for the full year.”

Over the full year HSBC expects pre-tax profit to fall 8.5% to £105.2m because even though second half trading has started well, the Nigerian currency, the naira, continues to weaken.

Across other markets in the second half, HSBC brokers said they expect to see currency pressures ease. But they believe Europe faces a tough year-on-year comparison due to the disposal of the firm’s Polish detergents and fabric softeners to German rival Henkel.