City Comment: Kean Marden_4
28 March 2012
For many centuries, the ‘black dog’ has been used as a euphemism for depression, most famously by Sir Winston Churchill in the Second World War and Dr Samuel Johnson in the 1700s.
Fri, 24 Feb 2012 | By Kean Marden, head of business services equity research, Jefferies International
For many centuries, the ‘black dog’ has been used as a euphemism for depression, most famously by Sir Winston Churchill in the Second World War and Dr Samuel Johnson in the 1700s.
The expression dates back to the Middle Ages, when the devil was believed to disguise himself as a black dog, and also to Roman times when the poet Horace noted that observing a black dog, particularly one with pups, was a premonition of bad luck.Equity markets were mired in depression towards the end of 2011 but the ‘black dog’ has recently been kicked back into its kennel following a series of better than expected trading updates across the recruitment sector.
In a similar vein to Manpower’s comments two weeks earlier, which noted stabilisation/modest recovery in North America but slightly softer European momentum, Randstad’s current trading comments were less bleak than many feared. US revenue growth accelerated from 8% in December to 13% in January while across Europe “the gradual slowdown continued in January”.
Meanwhile in the UK, the January ‘temp return to work’ statistic seems to have been towards the top end of management expectations at both SThree and Hays this year, although the latter reported a loss in the July to December 2011 trading period. In response, Hays unveiled 20 new initiatives, which it believes will deliver a £10-15m reduction in annual costs. During a meeting with analysts, management stressed on several occasions that consultant headcount would not be slashed in an attempt to deliver a short-term boost to profitability.
Elsewhere, Hays noted that headcount reductions in its Continental Europe and Rest of the World division (which began last October) had been put on hold following improved momentum in Brazil and Eastern Europe. In Australia the group has experienced a robust seasonal recovery particularly in the resource and mining sector, which shows no sign whatsoever of slowdown at present.
These trading experiences above remain far removed from the strong revenue growth, which characterised 2010 for most of the industry. But they are equally distant from the doomsday scenario (UK recession, severe Eurozone economic contraction and weak US momentum) painted by some commentators at the end of last year. With luck, the black dog will remain kennel bound throughout 2012.
Kean Marden, head of business services equity research, Jefferies International
For many centuries, the ‘black dog’ has been used as a euphemism for depression, most famously by Sir Winston Churchill in the Second World War and Dr Samuel Johnson in the 1700s.
The expression dates back to the Middle Ages, when the devil was believed to disguise himself as a black dog, and also to Roman times when the poet Horace noted that observing a black dog, particularly one with pups, was a premonition of bad luck.Equity markets were mired in depression towards the end of 2011 but the ‘black dog’ has recently been kicked back into its kennel following a series of better than expected trading updates across the recruitment sector.
In a similar vein to Manpower’s comments two weeks earlier, which noted stabilisation/modest recovery in North America but slightly softer European momentum, Randstad’s current trading comments were less bleak than many feared. US revenue growth accelerated from 8% in December to 13% in January while across Europe “the gradual slowdown continued in January”.
Meanwhile in the UK, the January ‘temp return to work’ statistic seems to have been towards the top end of management expectations at both SThree and Hays this year, although the latter reported a loss in the July to December 2011 trading period. In response, Hays unveiled 20 new initiatives, which it believes will deliver a £10-15m reduction in annual costs. During a meeting with analysts, management stressed on several occasions that consultant headcount would not be slashed in an attempt to deliver a short-term boost to profitability.
Elsewhere, Hays noted that headcount reductions in its Continental Europe and Rest of the World division (which began last October) had been put on hold following improved momentum in Brazil and Eastern Europe. In Australia the group has experienced a robust seasonal recovery particularly in the resource and mining sector, which shows no sign whatsoever of slowdown at present.
These trading experiences above remain far removed from the strong revenue growth, which characterised 2010 for most of the industry. But they are equally distant from the doomsday scenario (UK recession, severe Eurozone economic contraction and weak US momentum) painted by some commentators at the end of last year. With luck, the black dog will remain kennel bound throughout 2012.
Kean Marden, head of business services equity research, Jefferies International
