UK's Hays sees profit at top end of range as cost cuts offset hiring slump (updated)
UPDATE 2-UK's Hays sees profit at top end of range as cost cuts offset hiring slump Adds details, context throughout from paragraph 2 and graphic
July 10 (Reuters) - British recruiter Hays HAYS.L forecast annual operating profit at the top end of market expectations on Friday, as cost cuts and consulting fees helped cushion a prolonged downturn in global hiring, sending the company's shares up over 10%.
The recruitment sector has been under pressure, particularly in Europe, where weak economic growth has dented hiring, while the U.S. and parts of Asia have been stronger despite the fallout from the U.S.-Israeli war with Iran and economic uncertainties.
Net fees — a measure of income for recruiters — fell in Germany, Hays' largest market, and Britain, another major contributor.
To offset the hiring downturn, Hays has been reshaping its portfolio under new CEO Mark Dearnley, exiting several countries to narrow its focus to 16 core markets.
Average fees generated by consultants rose 8% year-on-year in Hays' fourth quarter ended June 30. However, overall like-for-like net fees fell 5% in the three months.
VISIBILITY STILL LIMITED
"Although we have limited forward visibility, we are mindful of heightened global macroeconomic uncertainty and expect near-term market conditions to remain challenging, with greater resilience in Temp & Contracting than in Perm," Hays said in a statement.
Employers have been reassessing staffing needs as they seek to cut costs and drive productivity by focusing investments in AI and need-based temporary hiring over more expensive permanent roles, compounding a recruitment slump after a post-pandemic boom and bust.
Hays, which leans more toward temporary and contract hiring, has benefited from this trend. While hiring volumes held steady, temporary and contracting net fees slipped 3%, but net fees from permanent hiring fell by a sharper 7% after volumes dropped 10%.
(Reporting by Nithyashree R B in Bengaluru; Editing by Rashmi Aich and Emelia Sithole-Matarise)