Hays’ results have dragged its languishing share price still further down. The logistics division is struggling, even though it focuses on the still-strong retail and consumer sectors. A major reason for the poor performance is Hays’ inability to find a new CEO, which has left the company lacking clear strategic vision in difficult times.
UK business service firm Hays has announced a fall in H1 profits.
Hays, the UK-based business services group, has announced a fall in profits for fiscal H1. This follows a profit warning last summer, which also saw the company’s share price fall dramatically. Most of the company’s problems seem to stem from its mail and logistics division, where senior management has warned that there is no upturn in sight.
Hays has been tipped to be one of the main beneficiaries of postal deregulation in the UK, and has already obtained some one year licenses. It hopes these will become seven-year contracts in September. If so, the company should be able to make a long-term investment in the market, which should be rewarded by enhanced profits.
Its logistics activities however remain a concern, especially given that much of Hays’ business lies in the consumer goods and retail sectors. These have been far less affected by the global slowdown than industry or high-tech, so there are few excuses readily apparent.
All companies in the logistics and mail industry are finding it increasingly difficult to operate profitably, but the fact that Hays (which ironically, is one of the UK’s biggest recruitment companies) has lacked a CEO for many months has certainly handicapped the business further.
Only companies with a clear corporate strategy and the drive to put it into effect will come out of the economic downturn unscathed. Without a captain at the helm, Hays is at risk of drifting into very dangerous waters.