Recruitment firm Hays has reported its first annual loss in 23 years, with a pre-tax loss of £54.5 million for the fiscal year ending June 30. This marks a significant downturn from the £1.5 million profit recorded in the previous year. The company's financial performance was affected by an aggressive cost-cutting strategy that did not fully offset weaker hiring conditions and restructuring costs.
Total net fees for the group decreased by 8 percent to £905.5 million. Hays attributed the decline in hiring to geopolitical tensions and the influence of artificial intelligence. The permanent recruitment sector proved particularly challenging, with net fees falling by 12 percent, while temporary and contracting fees saw a 5 percent decrease. Despite some hopes for market improvement among rival recruiters, Hays indicated no significant change in activity levels in recent weeks.
The company's pre-tax loss was influenced by several one-off actions. However, operating profits of £48.6 million exceeded market expectations. Chief executive Mark Dearnley has implemented substantial cost reductions, leading to a decrease in employee numbers from 9,523 to 8,125.
Hays, which specializes in recruiting for roles in technology, finance, and engineering, has been navigating a slowdown in the job market. Employers are delaying hiring decisions, and potential candidates are hesitant to switch jobs. The firm's performance is closely linked to the health of the office-based job market in key regions such as the UK, Germany, and France.
Regional Performance
The UK and Ireland market experienced tougher conditions in the public sector but showed relative resilience in the private sector. Net fees in this region fell by 10 percent to £174 million, though it returned to a pre-exceptional operating profit of £4 million, an improvement from a £5.8 million loss in the prior year. Germany, Hays' largest market, saw a 9 percent drop in net fees and a 24 percent decrease in operating profit, amounting to £41.2 million.
Strategic Initiatives and Outlook
Hays has proposed an unchanged final dividend of 0.29 pence per share, bringing the full-year payout to 0.44 pence. Shares in Hays experienced a decline of 3.45 percent, or 2.47 pence, to 68.98 pence on Thursday morning.
The company has launched its 'Momentum' strategy, aiming for over 50 percent growth in net-fee productivity in the medium term and approximately £50 million in additional annual structural cost savings this year. Dearnley stated that this strategy is designed to sharpen Hays' focus and enhance profitability and returns, including continued investment in digital platforms and employee development.
Analysts note that while the headline results were impacted by restructuring charges, the underlying business has demonstrated resilience through productivity gains and cost savings. The success of the new 'Momentum' strategy in driving sustainable growth recovery is now a key focus for investors.