Source: Sharecast
In a pre-close year-end trading update, the company said it now expects FY25 pre-exceptional operating profit of around £45m. This is below company-compiled consensus for £56.4m, based on ten analysts.
Hays said activity levels in the fourth quarter reduced sequentially, driven mainly by broad-based weakness in permanent markets globally. This reflects low levels of client and candidate confidence due to macroeconomic uncertainty. Temporary and contracting activity remains more resilient, it said.
The firm expects group like-for-like net fees to fall 9% year-on-year in Q4 against a soft prior-year comparative, with perm and temp & contracting down 14% and 5% respectively.
At a regional level, Hays expects LFL net fees in its largest country Germany to decline 5% with continued stability in the contracting segment but weaker conditions in perm and temp, mainly due to a subdued automotive sector.
Hays said the permanent segment has also weakened in the UK & Ireland, and it now expects a 13% divisional net fee decline.
"We expect current challenging market conditions to persist into FY26 and remain committed to delivering our focused strategy," Hays said.
"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."
At 0950 BST, the shares were down 12% at 61.80p.
Russ Mould, investment director at AJ Bell, said: "Hays’ share price slump implies the jobs market is going from bad to worse. So much bad news was already priced into the stock, and the shares have now taken another leg downwards on a worrying trading update.
"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.
"The combination of low permanent vacancy levels and individuals unwilling to look for new roles is the worst thing that can happen to a recruitment agency like Hays. Recruiters get paid commission for placing candidates into roles, and deal flow looks thin on the ground."