Global recruitment powerhouse Hays has reported disappointing results, attributing them to cost-cutting measures at previously high-spending firms and cautious hiring. The FTSE-250 company had already anticipated a "subdued summer" due to costs associated with its cost-cutting initiative aimed at enhancing long-term profitability in a challenging market.
This strategy led to a 15 per cent reduction in jobs, operational restructuring, and efficiency improvements.
The company incurred an exceptional charge of £42.2m, which, coupled with £37.8m in non-cash asset write-downs, resulted in a 92 per cent drop in overall pre-tax profit, down to £14.7m. Even when excluding exceptional items, pre-tax profit fell by 51 per cent to £94.7m.
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Group fees decreased by 12 per cent, while pre-exceptional operating profit dropped 46 per cent year on year to £105.1m, affected by "tough conditions in key markets", according to the company. Cash generation declined by 44 per cent to £112.3m, and earnings per share dropped by 53 per cent to 4.03p.
When including one-off costs, earnings per share plummeted by 104 per cent to -0.31p, as reported by .
CEO Dirk Hahn stated that market conditions were "increasingly challenging... with low confidence levels and longer-than-normal 'time-to-hire'."
"Our profitability was significantly impacted, including our three largest markets of Germany, Australia and the 海角视频," he added. "Against this backdrop, we have focused on enhanced operational rigour, driving consultant productivity and strong cost management, and are determined to build a more resilient Hays."
The recruitment industry experienced a post-pandemic boom as technology firms kicked off a hiring frenzy, with competitive salaries luring new talent.
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Yet, widespread cost-cutting, hiring hesitations from companies, and jobseekers' reticence to change roles have recently taken their toll on recruitment agencies.
Since late 2021, when Covid restrictions started to lift, shares in Hays have dropped roughly by one-third.
In early August, PageGroup disclosed that its profits for the prior six months had plummeted by over half, while Robert Walters reported an 18% decline in net fee income.
Since January, PageGroup has reduced its workforce by around 250, resulting in a current total headcount of 5,598, a decrease from just above 7,000 in September 2022, whereas Robert Walters has reduced its staff numbers by 13% since last year to 3,812.
Julie Palmer, Partner at Begbies Traynor, remarked: "The extent to which the global jobs market continues to be affected by reduced confidence was laid bare by Hays' full year results this morning, with the recruiter reporting an over 90 per cent drop in profit before tax for the twelve months."
"It is no surprise that conditions have been challenging of late for the recruiter... Hays is just one of a number of recruitment firms who have recently highlighted how difficult the market is as workers remain reluctant to change jobs amid economic and political uncertainty."
"If things do improve, Hays might be one of the first beneficiaries as firms worldwide start rehiring. Until that point, it will need to batten down the hatches and do everything it can to maintain its relatively robust financial position".