Hays profits set for ‘lower end’ of targets amid weaker recruitment market

Recruiter Hays has revealed a slump in fees over the latest quarter as it grapples with a sharp slowdown in the global hiring market.

The company said its profits are set to be at the lower end of previous targets as a result.

The warning comes after similar downbeat updates from rivals PageGroup and Robert Walters earlier this week.

The industry has come under pressure from firms slowing down headhunting activity due to soaring cost pressures and uncertainty over the economic outlook.

On Wednesday, Hays told shareholders it saw net fees decline by 15% over the quarter to December 31.

It said this was driven by weaker demand for permanent staff, with permanent hiring down 21% for the period, while temporary activity was down 10%.

In the UK, net fees fell by 14%, with the company reporting a 17% slide in Germany, another of its key markets.

The company therefore expects to delivery an operating profit of around £25 million for the past half-year, at the “lower end” of previous guidance.

It added that it expects market conditions to “remain subdued” in the near future but said it is too early to determine whether it is facing a “sustained market slowdown”.

Hays added that it has reduced its headcount by 2% over the quarter, with cuts particularly affecting the UK.

Chief executive Dirk Hahn said: “We are structurally improving Hays despite challenging markets, and remain resolutely focused on driving operational rigour through business line prioritisation, resource allocation, and efficiency initiatives.

“Temp & Contracting was sequentially stable through the quarter and our New Year ‘return to work’ will again be important so we are closely monitoring activity levels.

“Permanent net fees slowed but it is too early to say if recent weakness reflects a more sustained market slowdown or shorter-term deferrals of client and candidate decision-making.”

Hays shares were up 3.7% on Wednesday afternoon.