Hays' first-half profits slumped on the back of a significant slowdown in permanent hiring across its largest markets. The recruiter revealed its like-for-like operating profits plummeted by 58 per cent to £25.5million in the six months ending December, while its pre-tax profits plunged by two-thirds to £9.7million.
While the London-listed firm achieved around £25million in additional structural cost savings, this was offset by net fees declining by 13 per cent to £496million. Permanent fees shrank by 19 per cent to £190.3million as employers recruited fewer new people and took longer to bring them on board.
Full-time hiring slowed notably during the second quarter across Germany and the British Isles, with the latter territory affected by considerable weakness in technology, accountancy, and finance specialisms. Both markets also experienced subdued demand for temporary and contracting staff, particularly from the German automotive industry, where Hays has an outsized exposure.
Carmakers, including BMW, Volkswagen, and Mercedes-Benz, are struggling to boost sales due to high energy costs, intense competition from Chinese motor companies and the elimination of tax breaks for electric vehicles. Automotive suppliers, such as Bosch and Continental, have consequently announced large-scale job cuts.
Recruitment issues: Hays' first-half profits have slumped following a significant slowdown in permanent hiring across its largest markets. Volkswagen also recently struck a deal with Germany's biggest union, IG Metall, to cut over 35,000 positions across the country by 2030 to help save £12.4billion.
The recruitment sector has itself been scaling back headcount levels amid elevated interest rates, lacklustre economic growth, and mass redundancies in industries like technology. Hays has reduced its consultant numbers by more than a quarter from their peak two years ago to 6,810 in December.
However, the group's total consultant fee productivity grew by 4 per cent during the half-year period, helped by a 40 per cent increase in the United States. 'We continue to face considerable headwinds from economic conditions,' said Dirk Hahn, chief executive of Hays.
'Our key markets are being driven by powerful, supportive megatrends and remain characterised by significant talent shortages, which we help solve for our clients. 'When client and candidate confidence improves, and the cycle recovers, I am confident we will deliver a healthy drop through of net fees to operating profit.'.
Hays shares were 0.8 per cent down at 72.45p on Thursday morning, taking their losses over the past year to around 26 per cent. Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
