Hays set to reveal lower profits in face of challenging hiring market

Hays is set to be the latest recruiter to reveal lower profits in the face of a challenging hiring market this week.

The FTSE 250 commercial recruitment firm has already warned it was set for a “subdued summer” amid cost-cutting across the business to bolster its finances for the longer-term.

Investors will be hoping that falling interest rates and improving optimism among firms could improve the labour market outlook when Hays updates the market with a full-year trading update on Thursday, August 22.

Hide Ad
Hide Ad

Shares in the company are currently 14 per cent lower for the year, after a bruising 2024 so far for the recruitment sector as a whole.

Hays is set to be the latest recruiter to reveal lower profits in the face of a challenging hiring market next week. (Photo by Victoria Jones/PA Wire)Hays is set to be the latest recruiter to reveal lower profits in the face of a challenging hiring market next week. (Photo by Victoria Jones/PA Wire)
Hays is set to be the latest recruiter to reveal lower profits in the face of a challenging hiring market next week. (Photo by Victoria Jones/PA Wire)

The sector saw significant growth following the Covid-19 pandemic, with the tech sector leading a surge in hiring and increases in wage offers helping to attract new candidates.

However, cost-cutting across industries including technology, caution over hiring from firms and potential candidates being reluctant to move jobs have hit recruitment firms hard.

In its previous update last month, Hays said it expected profits to be just below its guidance after a slump in net fees over the latest quarter.

Hide Ad
Hide Ad

Hays chief executive Dirk Hahn told shareholders in July that the market remained “challenging”, with lower levels of confidence across companies meaning they took longer to hire people for roles.

It also indicated that recent trading was hampered by the “negative effects” of elections in the UK and France.

As a result, the company is expected to post operating profits of £105m for the year to June.

This represents a significant fall from the £197m operating profit it delivered the previous year.

Hide Ad
Hide Ad

The slump in profits came despite heavy cost-cutting, with the firm slashing annual costs by £60m in a programme which saw it close or merge 12 of its offices in the latest quarter.

Sanjay Vidyarthi, research analyst at Panmure Liberum, said the company has a “mountain to climb” after recent weak trading.

He added: “There is a lot to be done on regional productivity and cost rationalisation to achieve management’s conversion rate targets.”

The update comes after major rivals PageGroup and Robert Walters both pointed towards weakness in the sector.

Hide Ad
Hide Ad

Last week, PageGroup revealed that its profits for the past six months fell by more-than-half due to a reduction in new job vacancies.

PageGroup shed more than 1,000 fee earner roles in 2023 but said it would look to “broadly hold” numbers at current levels “to ensure we are well placed to take advantage of opportunities as sentiment and confidence improve”.

Nicholas Kirk, chief executive of PageGroup, said last week: “We continued to see challenging market conditions throughout the group in the second quarter and we experienced a softening in activity levels through the quarter, particularly in terms of new jobs registered and number of interviews.

Meanwhile, at the start of August, Robert Walters said net fee income slid by 18 per cent as challenges in the labour market endured longer than previously expected.

Related topics:

Comment Guidelines

National World encourages reader discussion on our stories. User feedback, insights and back-and-forth exchanges add a rich layer of context to reporting. Please review our Community Guidelines before commenting.

News you can trust since 1754
Follow us
©National World Publishing Ltd. All rights reserved.Cookie SettingsTerms and ConditionsPrivacy notice