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Investing.com -- Hays Plc (LON:HAYS), the global specialist recruitment firm, issued a surprise trading update on Thursday, cutting its fiscal 2025 profit forecast and warning of ongoing market challenges into 2026, sending its shares down over 12%.
Hays now expects approximately £45 million in pre-exceptional operating profit for FY25, down nearly 20% from previous guidance of £57 million and below consensus estimates of £56 million, according to Morgan Stanley (NYSE:MS).
Jefferies lowered its FY25 adjusted EBIT forecast to £43 million from £55 million, 23% below consensus.
The downward revision follows weaker-than-expected Q4 performance, ending June 30, with like-for-like net fees declining 8% year-over-year on a working day adjusted basis, or 9% without adjustment, versus consensus expectations of a 6.5% decline.
The permanent recruitment segment drove the weakness, with net fees falling 14% year-over-year due to reduced client and candidate confidence amid ongoing macroeconomic uncertainties. Temporary and contracting placements proved more resilient, declining 5%.
Regionally, Germany saw a 5% drop in net fees, weighed by the automotive sector. The U.K. & Ireland declined 13% due to weak permanent placements, while Australia & New Zealand fell 9%.
The Europe, Middle East & Africa (excluding Germany) region declined 13%, notably in France. Asia was relatively stable, down 3%, while the Americas slipped 1%, with North America posting a 5% increase.
Hays has made efforts to adjust its cost base, reducing quarterly costs from £76 million to £75 million. However, the business’s high proportion of fixed costs amplified the impact of lower net fees on profitability. The company expects to retain a modest net cash position at fiscal year-end.
Hays anticipates continued market softness into FY26. While formal FY26 guidance was not issued, analysts expect consensus profit estimates to be revised downward from the current £73 million, reflecting weaker FY25 trends.