Hays shares plummet as hiring slowdown hammers recruiter's profits
Hays shares plunged to their lowest level in around 14 years on Thursday after the recruitment company warned profits would more than half this year.
The London-based business expects to achieve about £45million in pre-exceptional operating profits for the quarter ending June 2025, compared to analyst predictions of £56.4million and down by more than 57 per cent on last year.
Hays told shareholders it faced 'more challenging' conditions in the permanent employment market, with heightened economic uncertainty weighs on client and candidate confidence levels.
Shares in the company plummeted 11.5 per cent to 62.15p by midday, making them the FTSE 250 Index's worst performer.
Hays shares have lost more than 40 per cent over the last year and have not traded at this level since December 2011.
Elevated interest rates, high energy prices, and tariffs imposed by President Donald Trump are cooling global job markets, leading to lower income for recruiters.
Hays anticipates reporting a 9 per cent like-for-like decline in net fees, including a 14 per cent drop in permanent fees.
In its largest territory, Germany, the group forecasts a 5 per cent decrease due to major headwinds facing the country's automotive sector, such as lower sales and profits, as well as intense competition from Chinese electric vehicle manufacturers.
Hays also expects to announce falls of 9 per cent for the Australia and New Zealand region and 13 per cent for the UK and Ireland.
Approximately 276,000 jobs have been lost in Britain since Chancellor Rachel Reeves' Autumn Budget, according to figures released last week by HMRC.
The Budget included a 6.7 per cent rise in the National Living Wage to £12.21 per hour and an increase in employers' National Insurance contributions from 13.8 per cent on annual wages above £9,100 to 15 per cent on salaries exceeding £5,000.
It told investors on Thursday: 'We expect current challenging market conditions to persist into FY26 and remain committed to delivering our focused strategy.
'Our initiatives to improve net fee productivity in real terms and back-office efficiency will be important drivers of medium-term profit recovery when the market recovers.'
Hays downsized its own consultant headcount by 5 per cent during the opening three months of 2025, with some redundancies happening in the British Isles.
Fellow London-listed recruiters Robert Walters and PageGroup have also recently cut their staff numbers.
Russ Mould, investment director at AJ Bell, said: 'Companies are clearly worried about the economic outlook, and they're reluctant to take on full-time staff, potentially not replacing anyone lost to natural turnover.
'At the same time, individuals are worried that if they move job, they'll be in the 'last in, first out' firing line if companies look for new cost savings.'
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