Hays shares slide on 5% decline in first-quarter fees, 2% in September

Hays PLC shares slumped early Monday after the recruitment firm reporting a reduction in first-quarter fees and headcount, as it looks to reposition the business to combat challenging hiring conditions.

In September, which Hays has previously described as "the key trading month in our first quarter", net fees declined by 2% on a year before.

The London-based company's shares slid 9.2% to 58.35 pence each on Monday morning in London. They now are down 0.3% over the past 12 months.

Net fees for the three months that ended September 30 declined by 5% on-year, or by 3% on a like-for-like basis. Recruitment for permanent position suffered the most. For Temp & Contracting, there was a 2% reported reduction, and 1% like-for-like reduction. Permanent fees tumbled 10%, or 7% like-for-like.

By region, Hays saw the steepest declines in Germany and Rest of World, both down 7% in total at actual rates, with Germany down 6% like-for-like, though RoW fees were flat on a like-for-like basis.

Contracting hours and average hours worked in Germany were "stable and in line with expectations" for the temporary & contracting unit, but "mixed" for permanent hiring.

In Australia and New Zealand, fees fell 4% at actual rates, and 3% like-for-like. In the UK & Ireland, they were down 5% by both measures.

Nonetheless, Hays stressed that this had marked the "12th consecutive quarter" of growth for consultant net fee productivity, which rose 8%. It also pointed to a new collaboration with Synthesia, which specialises in artificial intelligence-generated video advertising.

The company is in the "advanced" stage of negotiations for some of its businesses in Belgium, Brazil, China, Malaysia, Singapore, the Netherlands and United Arab Emirates, as it looks to restructure its geographic portfolio. Hays plans to focus on 16 core countries going forward, and expects disposals to reduce costs, though this would not be classed as structural savings.

It is making headway on plans to save about £50 million per year in 2027, having saved in £10 million in the first quarter, and a total of £123 million since the beginning of 2024.

The company's own consultant headcount dropped by 1% sequentially in the first quarter and was down 9% on-year, barring the effects of country disposals and exits. Non-consultant headcount was down 15% on-year at the end of the first quarter.

Net debt as of September 30 stood at £45 million, compared with net cash of £20.1 million at the end of June, though according to Hays this "reflects normal seasonal cashflows, cash exceptional payments, and share purchases related to our non-dilutive all-colleague share award ".

"We expect stable market conditions in the near term with

greater resilience in Temp & Contracting than in Perm. We continue to relentlessly focus on our structural cost and productivity initiatives , supported by investments in our digital platforms, as we create the 'talent workspace of the future'," Hays added.

Back in August, the company posted a pretax loss of £54.5 million for the financial year that ended June 30, compared with a £1.5 million profit the year before. Financial 2025 profit itself had been down 90% from £14.7 million in financial 2024.

Exceptional costs nearly tripled to £89.6 million in financial 2026 from £30.7 million the year before, reflecting a £45.1 million restructuring charge and £26.6 million in property portfolio rationalisation costs.

Chief Executive Mark Dearnley commented on Monday: "Our recently introduced 'momentum' strategy addresses the future hiring needs of our clients, sharpens our focus and captures the benefits associated with market leadership. There is real energy across the group, and I would like to thank our colleagues for their positive engagement and rapid execution.

"In line with our expectations, the decline in group net fees eased to 3% in Q1 driven by good Temp & Contracting growth in several of our countries. Perm activity remains mixed with sustained strong growth in North America but ongoing fragility in Northern Europe. Our medium term targets can be achieved through our own actions and we were pleased to make continued good progress with our structural cost and productivity initiatives during the quarter."

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