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Investing.com -- Hays (LON:HAYS) shares fell over 5% Thursday after the company reported a sharp drop in fiscal 2025 (FY25) earnings, as subdued hiring activity weighed heavily on results.
The U.K. staffing group said operating profit for fiscal 2025 fell 57% year-on-year to £45 million, matching its recent guidance and in line with consensus expectations.
Second-half operating profit declined 55% to £20 million, with the conversion margin narrowing to about 4%. For the full year, the conversion margin stood at 4.7%, down from 9% a year earlier.
"FY25 results came in line with expectations shared as part of the pre-close update in June, with FY25 operating profit of GBP45m," Jefferies analysts said in a note.
Net fees dropped 11% on a like-for-like basis to £972.4 million, with fourth-quarter fees down around 9%, in line with the company’s June update. Hays pointed to delays in hiring decisions and lower placement volumes amid ongoing economic uncertainty as the main drags on performance.
“Market conditions remained challenging during the year, with economic and political uncertainty weighing on confidence, increasing ‘time-to-hire’ and reducing placement volumes,” Chief Executive Dirk Hahn said.
The company ended June with net cash of £37 million, compared with £57 million last year, and declared a final dividend of 0.29p, down 86% from 2.05p.
The full-year dividend was cut to 1.24p from 3p, bringing the payout in line with its policy of 2–3 times earnings cover.
Hays added that it remains too early to gauge trends for September, typically a key month for recruitment activity.
Hays said trading in July and August was in line with expectations, with momentum unchanged from the fourth quarter. However, September remains the key month for the first quarter, and it is too early to identify any trends.
"Trading update comments point to no inflection in July/August and imply, in our view, downward pressure to FY26 consensus," Jefferies analysts said.