Hays warns over fee declines and consultant cuts as new boss named

He takes on the role at a difficult time in the global recruitment sector, with Hays revealing it expects to slash its consultant workforce by around 3 per cent to 4 per cent in the three months to September as the group reins in costs due to falling fees.

It has already reduced its number of consultants by 6 per cent, more than 500, since December.

In the UK and Ireland, its consultant workforce was slashed by 11 per cent and by 7 per cent in the second half. The cuts have been made through staff turnover with no redundancies planned. Hays reported pre-tax profits down 9 per cent on a like-for-like basis to £192.1m for the year to June 30.

Operating profits in the UK and Ireland tumbled 34 per cent to £28.7m as it said markets slowed “sharply” through the year, particularly in permanent recruitment.

While Hays notched up record fees of £1.3bn, up 6 per cent like-for-like over the year, it saw growth pull back markedly through the second half as economic uncertainty impacted recruitment.

Fee growth fell from 12 per cent in the first six months to 1 per cent in the second, with fees falling 2 per cent in the final quarter and by 2 per cent in June. It expects fees to continue dropping in the first half of its new financial year.

Outgoing boss Mr Cox, who has led Hays for 16 years, said: “While we cannot control the macroeconomic environment, we do control our reaction to it.

“We acted swiftly to manage our capacity and costs in the face of toughening markets, delivering increased profits in our second half.”

Mr Cox will help with a smooth transition, working out a 12-month notice period until August 23 next year. Mr Hahn said it was a “privilege to be appointed CEO of Hays, having been with the company for most of my career”.

Earlier this week, it was revealed that the UK’s private sector suffered a shock downturn in August on the back of lower new orders and higher borrowing costs, increasing concerns the economy could enter a recession later this year.

It represented the first monthly decline since January as firms were struck hard by recent hikes to interest rates, which have risen to a 15-year high of 5.25 per cent.

The closely followed S&P Global/CIPS flash UK purchasing managers’ index (PMI) fell to 47.9 in August, down from 50.8 in July. It was the lowest reading for around two-and-a-half years. Any reading above 50 is considered to show the sector is growing, while anything below represents a contraction.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “The early PMI survey for August suggests that inflation should moderate further in the months ahead, but also indicates that the fight against inflation is carrying a heavy cost in terms of heightened recession risks. A renewed contraction of the economy already looks inevitable, as an increasingly severe manufacturing downturn is accompanied by a further faltering of the service sector’s spring revival.”