Recruiter Hays has warned that its annual profits could fall short of expectations because of a lacklustre global jobs market and German car firms slowing hiring amid the threat of higher US tariffs.
Shares in the company, which is one of the biggest recruitment agencies in Europe and the largest to be listed in the UK, dropped by more than 13% following the update on Thursday morning.
It said activity in recent months had dropped, driven largely by weakness in permanent recruitment globally “reflecting low levels of client and candidate confidence as a result of macroeconomic uncertainty”.
The market for temporary and contracting work continues to be more resilient, it said.
Hays has been grappling with a downturn in global hiring for a prolonged period, leading it to cut staffing levels significantly to reduce costs.
Worsening economic conditions in much of Western Europe, and growing uncertainty from US President Donald Trump’s trade policies and conflict in the Middle East, have contributed to many firms holding off hiring.
In Germany, the group’s largest market, subdued activity in the automotive sector has driven weaker permanent and temporary recruitment.
Car makers in the country are facing up to a 25% tariff rate on exports to the US with big firms pushing to make a deal with Mr Trump to soften the blow.
Hays said it was expecting fees to decline by 5% in Germany, and by a steeper 13% from permanent recruitment within its UK and Ireland business.
Lower fees are expected to eat into its earnings, with the firm now forecasting a pre-exceptional operating profit of about £45 million for the year to the end of June, down from the £56.4 million previously guided by analysts.
Looking ahead, Hays said it expects “challenging market conditions to persist” into the new financial year, meaning it was focusing on improving fee income and efficiency.
