Hays personnel unit's resilience surprises City

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Hays, the support services group, went some way to restore City confidence yesterday after a devastating profit warning in June, with signs that its personnel unit was proving more resilient than analysts had feared.

Bob Lawson, the chairman, said the division's broad sector coverage and its geographic spread had helped to cushion it despite deteriorating conditions in the personnel sector.

However, earnings from the division in July and August, the first two months of Hays' financial year, were broadly flat on last year, prompting concern the sector had yet to bottom out.

Mr Lawson said Hays would continue to expand its personnel unit, which contributes half of the group's profit, in Europe. "In continental Europe, personnel services are relatively undeveloped compared with the US or the UK," he said. Hays plans to open between 10 and 15 branches in France, Italy, Spain, Portugal and Germany next year.

Hays reported pre-tax profits, before exceptionals, up 5 per cent at £262m for the year to 30 June. Mr Lawson said: "When the economy toughens for our customers they focus on their core skills, outsourcing their non-core activities. It's those that represent the biggest opportunities for us." Hays' shares fell 7p to 150p.