Recruitment firm Hays expects earnings to be at lower end of forecasts

Hays said trading was hampered by the “negative effects” of elections in the UK and France, as well as challenging conditions in Germany and Australia. The group said there were few signs of a turnaround in the jobs market, adding it was too early to say if there would be a “meaningful recovery” in the UK after Labour’s landslide win in the General Election.

It warned that operating profits are expected at around £105m – just below consensus expectations of between £106m to £113m.

The results follow a profit warning from rival PageGroup on Tuesday after it saw gross profits fall 12 per cent on a constant currency basis to £224.3m in the three months to the end of June and worsen through the quarter.

Hays also revealed it cut its consultant workforce by another 18 per cent year-on-year in the three months to the end of June, while back office staff numbers fell by 9 per cent.

It closed or merged 12 offices in the quarter, ending the financial year with 236, as part of wider moves that saw annual costs slashed by about £60m.

Hays chief executive Dirk Hahn said: “Market conditions remained challenging in the quarter.

“Overall, we continued to see longer-than-normal ‘time-to-hire’, impacted by low levels of confidence.

“Given this backdrop, we have remained focused on driving consultant productivity and tight cost control.

“Given ongoing global uncertainties, in the near term we expect our key markets will remain challenging.”

The update showed that in the UK and Ireland, net fees tumbled 17 per cent on a like-for-like basis, while they were 22 per cent lower in Australia and New Zealand, 17 per cent down in Germany and 11 per cent off in the rest of the world division.

“In the UK and Ireland and France we expect a subdued summer, and it is too early to determine when we will see a meaningful recovery,” Hays said.

Richard Hunter, Head of Markets at interactive investor, commented: “PageGroup bore the brunt of investor disappointment with its update earlier this week, so this moribund performance from Hays comes as little surprise. The job hiring market globally remains on the back foot, despite generally low levels of unemployment. Recruitment companies such as Hays are being affected by the double whammy of low company confidence to hire new workers, coupled with candidate caution about accepting job offers given the difficult economic backdrop.”