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Investing.com -- Hays Plc (LON:HAYS) reported a 9% year-over-year decline in net fee like-for-like growth for its third quarter of fiscal year 2025, which was in line with analysts’ consensus expectations released on Wednesday.
The recruitment company’s performance was shaped by steady trading and easier year-on-year comparables.
The temporary business demonstrated resilience, with a 6% decline in LFL fees, slightly outperforming RBC’s estimate, while the permanent business continued to face challenges, with a 14% decline, although this represented an improvement over the 19% decline seen in Q2 of fiscal 2025.
Regionally, Germany’s performance exceeded expectations, with a 9% decline in LFL net fees, while other regions slightly underperformed.
The UK saw a 13% decline in LFL fees, and the rest of the world (RoW) posted a 7% decline.
Within RoW, EMEA excluding Germany fell by 10%, Asia declined by 6%, and the Americas posted 2% growth.
Hays’ foresees persistent challenges from macroeconomic uncertainty, leading to limited visibility for FY26.
Despite this, they will prioritize maintaining strong productivity and cost discipline. Headcount is expected to remain largely stable in Q4, with ongoing efficiency measures reducing costs.
The shift of Easter entirely into Q4 FY25 is projected to have a 1% negative effect on year-on-year net fee growth for that quarter.
The company’s outlook for the remainder of FY25 remains in line with consensus operating profit expectations of £57 million.
However, the outlook for FY26 is more uncertain, with analysts highlighting potential downside risks due to ongoing macroeconomic headwinds.
Although permanent recruitment markets, particularly in Germany and EMEA, remain difficult, the temporary and contracting sectors have shown more resilience.
Analysts at RBC Capital Markets, while cautious about near-term performance, maintain a constructive view on Hays’ longer-term prospects, expecting the company to recover as geopolitical tensions ease.
They note that although the current slowdown in staffing activity is more prolonged than previous downturns, Hays’ ability to generate returns in the long term remains intact.
RBC also pointed to the company’s attractive valuation relative to its historical EV/net fees metric, which has historically helped provide a ’floor’ for the share price.
Morgan Stanley (NYSE:MS) echoes similar views, stressing that while near-term challenges could lead to downside risks for FY26 EBITA estimates, Hays’ long-term earnings power remains promising once market conditions stabilize.