Shares in global recruitment giant Hays fell heavily today as it issued a profit warning following a sharp slowdown in hiring for permanent staff.
The London based group said hiring activity levels during the three months to end June “reduced sequentially” largely as a result of the downturn in permanent recruitment “reflecting low levels of client and candidate confidence as a result of macroeconomic uncertainty.”
In early trading shares in the company, which has its headquarters in Marylebone, dropped 9.6p, or 13.7%, to 60.60p.
But Hays said hiring in the temporary and contracting sectors “continues to be more resilient.”
The recruitment sector has suffered a tough 18 months after enjoying a post-Covid boom as companies staffed up following the long period of lockdowns.
But since the start of 2024, wage inflation combined with economic uncertainty and, more recently, higher National Insurance costs, have resulted in hiring plans being put on hold, particularly for permanent roles.
Hays said global net fees dropped by a further 9% in the fourth quarter against what was already a soft prior year. Fees in permanent hiring fell 14% while the temp and contracting sector was only 5% lower.
As a result, pre-exceptional operating profit for the financial year as a whole are only expected to come in at around £45 million, down more than £11 million on the previous market consensus of £56.4 million.
Last year Hays made operating profits of £105 million but that was down from £197 million in 2023.
Like for like net fees in Hays’ largest market, Germany, fell by around 5%, “primarily due to a subdued automotive sector.”
The UK was also weak with fees down around 13% while Australian and new Zealand was down 9%.
Net fees are expected to decline by 9% year on year in the rest of the world with France particularly badly hit. The strongest market was North America with 5% year on year growth.
In its fourth quarter trading update Hays continued: “We expect current challenging market conditions to persist into FY26 and remain committed to delivering our focused strategy.
“Our initiatives to improve net fee productivity in real terms and back-office efficiency will be important drivers of medium-term profit recovery when the market recovers.”
