Recent Updates On Two Stocks: Hays PLC and Hunting PLC

Corporations’ latest results announcements related to them have a direct bearing on the movement of their stock prices on the exchanges, either upward, downward or sideways, based on the significances they have on their future operating performance. Here we are going to discuss results of two companies operating in diverse sectors, which have come up with some announcements recently, which have impacted their stock price movements.

Below are two LSE listed companies operating in the diverse sector.

(Source: Thomson Reuters, as on 29^th August 2019 (GMT 10:00 AM))

Hays PLC

Hays Plc (HAS) is a London, the United Kingdom-based recruitment company. The company’s business is differentiated in four segments geographically: Australia & New Zealand, Germany, United Kingdom and Ireland and Rest of World. The group has its operations across 265 offices spread out in 33 countries.

Financial Highlights (FY2019, £ million)

(Source: Preliminary Results, Company Website)

In FY2019, the company’s net fees increased by 5 per cent to £1,129.7 million as compared with that in the financial year 2018 of £1,072.8 million, while its Like-For-Like (LFL) growth rate was 6 per cent year over year. Operating profit, before exceptional items, rose by 2 per cent to £248.8 million in FY 19 against £243.4 million in FY18, with LFL growth of 4 per cent in FY2019. Cash generated by operations surged by 8 per cent to £263 million in FY19 against £243.5 million in FY18.

In Australia & New Zealand segment, the net fee growth was 4 per cent over the year-ago period, with flat operating profit as market conditions slowed in the H2 FY19. In ANZ segment, the company placed record Temp and Contracting workers of 22,000 during June 2019. In Germany segment, the company recorded net fee growth of 9 per cent, operating profit growth of 7 per cent, growth of fees in Temp & Contracting of 8 per cent & Perm fee growth of 16 per cent. In UK & Ireland segment, the net fee growth was 2 per cent and operating profit increased by 4 per cent, due to robust cost control. In Rest of World, the net fee growth was 8 per cent with operating profit up by 2 per cent.

Profit before tax stood at £231.2 million in FY19, a decrease of 3 per cent from the previous year period. Basic earnings per share reduced by 3 per cent to 11.10 pence as compared to 11.44 pence in FY18, while basic earnings per share, before exceptional items, surged by 4 per cent to 11.92 pence in FY19.

In the financial year 2019, the net cash increased by 6 per cent year over year to £129.7 million, with robust 106 per cent conversion of operating profit into operating cash flow. The board proposed a hike in full-year 2019 core dividend per share of 4 per cent, in line with earnings, to 3.97 pence and a special dividend of £79.7 million, an increase of 9 per cent to 5.43 pence per share. The total full-year 2019 dividends were £137.9 million against £128.3 million in FY18.

In FY19, the company invested additionally into back-office scalability and consultant productivity tools. The company restructured is operations, primarily in Europe, and incurred a £6.8 million charge. This exercise is projected to deliver annualised pro-rata cost savings of £5 million. The company also opened 8 new offices internationally and made further significant office expansions in Europe, the Americas and Asia. Year-end company consultant headcount increased by 4 per cent, although it was by 2 per cent since 31st December 2018.

Outlook

The company ended the year with enough cash and the Board increased the full year 2019 core dividend by 4 per cent. The Board declared the company’s 3rd successive special dividend of £79.7 million. In the first two years of current plan ending in the next three years, the company has paid out £265 million in total dividends.

Across the years, the company have built a highly diversified business to access the world’s most exciting sectors and markets. This plan has determined much of the current growth and positions to capitalise on the substantial long-term structural prospects. Despite an increasingly tough international economic backdrop, the company’s market position has remained undiminished and, combined with highly experienced international management team, it enjoys a robust financial position. The company said that it would continue to balance the long-term potential with the several challenging markets it currently faces.

Share Price Performance

Daily Chart as at August-29-19, before the market close (Source: Thomson Reuters)

On August 29, 2019, at the time of writing (before the market close, at 10:00 AM GMT), Hays PLC shares were trading at GBX 134.50, down by 3.31 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 208.17/GBX 132. At the time of writing, the share was trading 35.39 per cent below the 52-week High and 1.89 per cent above the 52-week low. Stock’s average traded volume for 5 days was 3,474,395.00; 30 days – 3,447,301.20 and 90 days – 3,529,718.13. The traded volume (average) for 5 days was up by 0.79 per cent versus 30 days’ average traded volume. The group’s stock is reflecting significantly lower volatility as against the benchmark index based on the company’s beta of 0.80. The outstanding market capitalisation was around £2.03 billion, with a dividend yield of 2.77 per cent.

Hunting PLC

Hunting PLC (HTG) is a London, United Kingdom-based international energy services provider, which specialises in manufacturing, trading and renting high-quality upstream equipment for the well-bore. The group’s wide range of products and associated services spans assist in extracting hydrocarbons across the lifecycle of an oil and gas well, and its customers include national and international oil companies, major energy services groups and other key members of the energy supply chain. The company’s operations are differentiated into five operating segments: Hunting Titan, US, Canada, Asia Pacific, Exploration and Production, and Europe, Middle East and Africa.

Financial Highlights (H1 FY2019, US$ million)

(Source: Interim Report, Company Website)

During the first half of 2019, operators were encouraged to increase drilling and production expenditure within the lower-cost shale basins as the average WTI crude oil price was approximately 29% higher in the H1 FY19 at $58 per barrel. US segment revenue increased by 23% to $181.1m, supporting an increase in the group’s revenue of 15% to $508.9m.

Reported gross profit rose by 6% to $145.6m in H1 FY19 with gross margin at 28.6%, reflecting management’s actions within Hunting Titan to decrease inventory levels and pricing on certain product lines. Profit from operations rose from $53.5m in H1 FY18 to $55.6m in H1 FY19, driven by the performance of the US and Hunting Titan segments.

The reported profit before tax from operations, which accounts for charges for intangible asset amortisation and exceptional items, rose to $40.1m from $38m in H1 FY18, while profit before tax from operations was $54.6m.

Reported diluted earnings per share were 17.3 cents (H1 FY18: 19.1 cents) and underlying diluted earnings per share was 23.6 cents in the first half of 2019 (H1 FY18: 25 cents). The board declared interim dividend per share of 5 cents, an increase of 1 cent against the 4 cents in H1 FY18. On 30^th June 2019, the net cash stood at $33.4 million.

Outlook

In current market conditions, pricing pressure is a feature of the current trading environment and supplying goods and services to oil and gas drilling companies remains highly competitive. As the supply and demand for energy is a key driver of demand for products, Hunting is exposed to the influence of oil and gas prices, and any adverse movements in commodity prices may heighten its exposure to the risks associated with shale drilling.

However, the company remains focused on the ability to respond to commodity price changes and geopolitical volatility. The recent trend in oil prices has supported the demand for the company’s products from increased production activity. The company is taking initiatives to improve margins and reduce costs. Hunting remains well positioned to capture opportunities in the current market with a strong presence in upstream equipment and service markets, a healthy balance sheet and tightly managed cost base. Through expansion and acquisition, the group has become a leading upstream energy services company.

Share Price Performance

Daily Chart as at August-29-19, before the market close (Source: Thomson Reuters)

On August 29, 2019, at the time of writing (before the market close, at 10:00 AM GMT), Hunting PLC shares were trading at GBX 447, up by 4.002 per cent against the previous day closing price. Stock's 52-week High and Low are GBX 883.50/GBX 402.20. At the time of writing, the share was trading 49.41 per cent below the 52-week High and 11.14 per cent above the 52-week low. Stock’s average traded volume for 5 days was 274,176.20; 30 days – 380,509.67 and 90 days – 376,938.92. The traded volume (average) for 5 days was down by 27.95 per cent versus 30 days average traded volume. The group’s stock is reflecting significantly higher volatility as against the benchmark index based on the company’s beta of 1.33. The outstanding market capitalisation was around £717.5 million, with a dividend yield of 1.61 per cent.