Recruitment firm Hays has rebased its dividend to what it believes is a more appropriate level, as its home market remains depressed and other markets show signs of deterioration.
The dividend has been pared, as widely expected by the market, with the company reducing the interim payment to 0.83p from 1.85p the year before. The group intends future dividends to be covered two to three times by earnings.
Broker Charles Stanley had correctly predicted the interim dividend would be reduced but had gone for a round number estimate of a penny.
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Net fees in the second half of 2011 rose 15%, or 11% in a like-for-like (LFL) basis to £373.8m from £326.1m at the half-way stage in 2010.
Operating profit rose 21% (LFL: 14%) to £63.1m from £52.1m the year before while profit before tax jumped 24% to £60.3m from £48.6m at the interim stage in 2010. Charles Stanley had forecast profit before tax of £56m.
Basic earnings per share climbed 18% to 2.76p from 2.34p.
Net fees in the UK were down 6%, largely because of an 18% reduction in fees from the public sector but even the private sector, which the government was expecting to pick up the slack and create oodles of new jobs, disappointed with net fees down 1% year-on-year.
The international picture was a lot brighter, and 69% of the group's fees are now generated overseas, up from 62% at the interim point last year.
Continental Europe & Rest of World, the group's largest division, saw 27% LFL growth in net fees, driven by 31% LFL improvement in Germany.
Asia Pacific's net fee growth was 16% on a LFL basis.
On the down side, Hays warned that trading conditions in several markets became tougher as the year wore on.
"The global economic backdrop became increasingly uncertain as the half progressed, and this continues to adversely [have an] impact [on] confidence in some of our markets, especially global banking. However, we continue to see good levels of demand in other markets, many of which are key competitive strengths for Hays, including the mining-based regions of Australia, and the IT and engineering sectors in Germany," said Hays Chief Executive, Alistair Cox.
"With such diverse markets, our focus is on maximising profitability and market share gains in tougher areas, together with continued selective investment to capitalise on growth opportunities," Cox added.
As for the dividend cut, which strikes a discordant note given the bragging elsewhere in the statement about strong profits growth, Cox said the group remains committed to paying a meaningful dividend, but "given the slowing of our profit growth in the half and our current view on the likely growth rate of group profitability in the current uncertain economic environment, we have decided to rebase the dividend to a level that is more appropriately covered by current earnings and cash flow."
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