Hays warns over profits after ‘clear slowdown’ in December hiring

Recruitment firm Hays has warned over profits and ramped up cost-cutting efforts after a “difficult” December as jobs markets in the UK and worldwide slowed down.

The group cut its workforce by around 600 roles worldwide to reduce costs as it looked to offset a “clear slowdown” across most of its markets last month, with firms and job seekers holding off from making decisions on roles.

It said group consultant employee numbers were 450 lower globally during the final three months of 2023, including about 50 in the UK.

This was down 5% quarter-on-quarter and 12% year-on-year, although consultancy cuts were made largely through natural staff turnover, according to Hays.

The firm has also axed around 150 non-consultant roles – a 3% reduction in those teams during the fourth quarter – including about 10 jobs in the UK.

Hays said group fees slumped 15% last month and were 10% lower overall in the quarter.

It now expects first-half underlying operating profits of around £60 million.

Analysts had been expecting earnings of around £73 million for the half-year.

Dirk Hahn, chief executive of Hays, said: “Overall market conditions became increasingly challenging through the quarter, including a clear slowdown in most markets in December, notably in our permanent businesses as client and candidate decision-making slowed.”

He added: “Given increased uncertainties and reduced client and candidate confidence, our New Year ‘return to work’ is particularly important, and we are closely monitoring activity levels.

“It is too early to say if December’s weakness reflects a sustained market slowdown or some placement deferrals, however, we expect near-term market conditions to remain challenging.”

It said actions in its first half would help slash annual costs by around £30 million, with “further material savings” expected in the final six months.

Net fees tumbled by 17% across the UK and Ireland division, which accounts for a fifth of group fee income.

London and Scotland were particularly affected by the slowdown, where net fees dropped 21% and 26% respectively.

It said that across specialisms, net fees in its two largest businesses – accountancy and finance, and technology – decreased by 16% and 32% respectively.