Hays: Profit cut in half at recruiter
Hays has reported another drop in profit as it struggles amid a long-running in the recruitment sector.
Group net fees, a key performance indicator in the recruitment sector, dropped 13 per cent in the six months ending 31 December.
Operating profit fell 56 per cent to £25.5m, while profit before tax fell 66 per cent to £9.1m.
Hays’ share price has fallen by more than a quarter in the last year.
Net fees have fallen by nearly a quarter since 2022, while the firm’s head count has dropped by around 2,700 employees in the last two years.
In the six months to 2022, Hays reported £94m in profit before tax.
The recruitment sector has been hit hard by cost-cutting across industries, caution over hiring from firms, and potential candidates’ reluctance to move jobs.
Hays’ chief executive said the company was focused on “long-term growth markets”.
“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 focuses on cost saving
Hays said it had made cost savings amounting to £25m per year in the last six months through “operational restructuring and back office efficiency programmes”, with aggregate savings since the start of the 2024 tax year of around £55m.
It delivered that fees from temporary and contracting work were “growing strongly” but that economic headwinds were still “considerable”.
Hahn added: “Our focused strategy has five levers designed to build a structurally more profitable, resilient and growing business and, despite ongoing macroeconomic uncertainty, we have remained relentlessly focused on delivering them.
Earlier in the year, Panmure liberum analysts said that “deep cultural change is required at Hays as it shifts from the international growth strategy to a focus on tight operational control to drive consultant productivity faster than cost inflation”.
“This is a complex process that will take time and there is much still to be proven.”
The broker rated Hays a ‘Hold’.