22nd Aug 2024 09:14
(Alliance News) - Hays PLC's full-year results on Thursday bore the scars of tough recruitment markets with profit and net fees down sharply.
In the financial year to June 30, the London-based recruitment company said pretax profit plunged to GBP14.7 million from GBP192.1 million a year prior.
During the period, Hays booked a GBP42.2 million cash exceptional charge related to ongoing restructuring of the business. It also incurred GBP37.8 million in non-cash asset write downs relating to the partial impairment of goodwill in its US business and the impairment of finite-lived intangible assets.
Excluding the one-off items, operating profit was GBP105.1 million down 47% from GBP197.0 million. This was in line with a company compiled consensus.
Net fees fell 14% to GBP1.11 billion from GBP1.29 billion, or by 12% on a like-for-like basis. Turnover decreased by 8.3% to GBP6.95 billion from GBP7.58 billion, or by 6% LFL.
Basic earnings per share before exceptional items came to 4.03 pence, down from 8.59p.
Chief Executive Dirk Hahn explained: "We saw increasingly challenging market conditions through [financial 2024] in both perm and temp, with low confidence levels and longer-than-normal 'time-to-hire', and our profitability was significantly impacted, including our three largest markets of Germany, Australia and the UK."
This has prompted the company to embark on a restructuring exercise.
Hahn said the firm has made a strong start in restructuring operations and had delivered around GBP60 million of annualised savings in the financial year. Group headcount has decreased by 15%.
In addition, Hays expects to deliver a further GBP30 million annual cost savings by financial 2027.
"Our actions are better positioning Hays to benefit when markets recover, and when they do, we can return to, and then exceed, prior peak profits," Hahn remarked.
Hays said current trading in July and August has been in line with expectations. "However, September is the key trading month in our first quarter, and it is too early to assess trends," the firm noted.
Hays said it sees "significant scope" to increase both fees and operating profit as average placement volumes per consultant returns to more normal levels.
The firm highlighted a strong balance sheet with net cash of GBP56.8 million.
This "strong" financial position saw Hays leave the dividend unchanged at 3p per share.
Shares in Hays edged up 0.4% to 95.35p each on Thursday morning in London.
By Jeremy Cutler, Alliance News reporter
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