Hays PLC, a U.K. recruitment company, announced that it anticipates falling short of current market forecasts for the first half-year. This comes after experiencing a decrease in net fees in the second quarter of fiscal 2024, particularly due to a challenging December.
Lower-than-Expected Operating Profit
Hays now predicts reporting pre-exceptional operating profit of approximately £60 million ($76.5 million) for the half-year ending on December 31. This figure is below the company-compiled consensus of £73 million, based on forecasts from six analysts.
Decline in Net Fees
Net fees, a significant industry metric, declined by 10% on a like-for-like basis during the quarter. In December alone, they experienced a 15% drop. The U.K. & Ireland saw a 17% decrease over the quarter, while Australia & New Zealand experienced a 20% decline. The rest of the world incurred an 11% drop.
Temporary and Permanent Net Fees
Within the net fees category, temporary net fees fell by 5% during the quarter, while permanent net fees experienced a 17% decline.
Stable Balance Sheet
Hays reassured investors by stating that it maintains a strong balance sheet with £60 million in net cash, aligning with expected figures.
Uncertain Market Conditions
The company acknowledges that it is too early to determine whether the decrease in fees during December reflects a sustained market slowdown or temporary deferrals in placements. However, Hays expects ongoing challenging market conditions in the near future.
Strategy for Success
Chief Executive Dirk Hahn emphasized that the company's strategy entails an increased focus on enhancing its leading positions in attractive and skill-short markets. This includes Germany, non-perm positions, and enterprise clients. Hahn expressed confidence that these initiatives will significantly improve profitability once the end markets stabilize.