Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Shares in Hays fell by as much as 18 per cent on Tuesday after the FTSE 250 recruitment group issued a profit warning on the back of a “clear slowdown” in global jobs markets.
Hays said its half-year earnings were likely to come in below expectations after a “difficult December”, in which potential candidates and employers held off making decisions, and its fees fell by more than 15 per cent.
Hays shares fell as much as 18 per cent in early trading in London before paring those losses, pulling down other listed recruiters. Robert Walters shares were down by about 8 per cent in morning trading, while PageGroup shares were down 5 per cent.
Recruiters have struggled in recent months with a difficult jobs market, with Hays noting a slowdown in permanent hiring in particular “as client and candidate decision-making slowed”. Temporary placements were also hit, however, as Hays “did not see our normal seasonal step-up in worker volumes”.
Fees from permanent hiring fell 17 per cent in the three months to the end of December, year on year, while temporary placement fees came in 5 per cent lower.
The company suffered a 10 per cent drop in fee income in the quarter, with the steepest declines in the UK and Ireland and Australia and New Zealand. Fees compared with the same period last year fell by 17 per cent and 20 per cent respectively, in those regions.
The recruiter has embarked on a series of cost cuts in response to the slowdown in demand, cutting its consultant headcount by 5 per cent in its most recent quarter, and other staff by 3 per cent.
Hays is now expecting £60mn in first-half profits, more than 10 per cent below current market expectations of £73mn.
Dirk Hahn, chief executive, said: “It is too early to say if December’s weakness reflects a sustained market slowdown or some placement deferrals, however, we expect near-term market conditions to remain challenging.”
In July Hays issued a trading update for the second quarter of 2023, where it also reported a decline in activity within the UK and Ireland due to the volume of individuals securing permanent roles falling.
In that statement the company said the slowdown had caused fees from permanent roles in the three months to the end of June to fall by 15 per cent compared with the same period in 2022.
In October Robert Walters reported a 13 per cent drop in net fee income for the three months to the end of September, compounding a 10 per cent drop in the previous quarter.
