Hays sees £45 mln profit for FY25 as permanent recruitment weakens globally

Hays Plc projects a £45 million pre-exceptional operating profit for fiscal 2025, below the company compiled consensus of £50 million, citing a 9% year-on-year decline in group like-for-like net fees for the fourth quarter driven by weakening permanent recruitment markets globally and macroeconomic uncertainty. While temporary and contracting activity remained more stable, profitability was limited by the fixed cost base; Hays expects current market conditions to persist into fiscal 2026 and will focus on productivity and efficiency to support profit recovery.

Analysis

Hays Plc has revised its fiscal 2025 pre-exceptional operating profit forecast downwards to £45 million, falling short of the company-compiled consensus of £50 million, primarily due to deteriorating global permanent recruitment markets. This weakness is evidenced by an anticipated 9% year-on-year decline in group like-for-like net fees for the fourth quarter ending June 30, a particularly concerning figure as it compares against an already softer prior-year period. The downturn is geographically widespread, with significant net fee declines projected in Germany (its largest market), a 13% fall in the U.K. and Ireland, and a 9% decrease in the Rest of the World segment; North America stands as a solitary area of growth with a forecast 5% year-on-year increase. While temporary and contracting activities have demonstrated greater stability, the company's fixed short-term cost base is reportedly limiting profitability across both its permanent and temporary contracting segments, both of which are expected to see declines. Hays anticipates these challenging macroeconomic conditions, marked by subdued client and candidate engagement, will extend into fiscal 2026. In response, management intends to focus on enhancing net fee productivity and back-office efficiency to support a medium-term profit recovery when market conditions improve, while noting that cash performance remains within normal trends with only a modest net cash outflow expected in Q4.

Key Decisions for Investors

• Investors should exercise caution given Hays' downward revision of its FY25 operating profit guidance below consensus and the anticipated persistence of challenging market conditions into FY26.
• Closely monitor leading indicators for the global recruitment sector, particularly in permanent hiring, and track Hays' execution on its stated productivity and efficiency initiatives as key drivers for potential medium-term recovery.
• Re-evaluate exposure considering the broad-based geographical weakness in net fee generation, with the notable exception of North America, and the limited profitability in the more stable temporary segment due to fixed costs.