After just 10 months, Hays’ CEO is to be replaced by the chief of Hays Personnel, Denis Waxman.
Hays chief executive Colin Matthews, who joined the group 10 months ago, is to quit some time in 2004. Denis Waxman, the head and founder of the Hays recruitment business, will succeed him. Exceptional charges of GBP628 million, related to Hays’ restructuring program, meant that the company reported a GBP476 million pre-tax loss in the year to June 30, against a GBP148 million profit for the same time last year.
The change in board management reflects Hays’ new emphasis on its core personnel business, the ultimate focus of its restructuring process. Mr Matthews, who was employed to lead and manage the reorganization, does not feel comfortable working as chief executive for a recruitment company even though he believes it is the right thing for the group.
The group stated that its personnel business had held up strongly in the past year, despite turbulence in many job markets, and was performing significantly ahead of its competitors. The recruitment business generated 60% of the group’s profits, with GBP114.3 million of operating profit on sales worth GBP1.1 billion.
Selling the logistics unit has proved hard. It has been under performing, and the search for potential bidders has been going on since January. However, despite a lack of certainty over its future, Hays Logistics has continued to renew contracts with some big players in the retail and consumer sector both in the UK and on the Continent. There is no firm progress in the logistics division’s disposal, although a US private equity group recently emerged as a possible suitor.
The exceptional charges do not bode well for the valuation of the logistics division or for that of the mail and express division, which is also yet to be sold. Hays will not return cash to shareholders until it has completed its restructuring. For these reasons, Matthews must prove that the restructuring process has not stalled, and that he can tie up all the loose ends in Hays’ transformation before moving on.
