Recruitment firm Hays has issued a warning that earnings are likely to be at the bottom end of predictions after political uncertainty placed pressure on the job markets.
The recruiting agency reported a 15% fall in comparative net fees in its fourth quarter to 30th June, worsening to an 18% decline during the last month.
Hays indicated that trade was hindered by the “negative effects” of elections occurring in both the UK and France, in conjunction with challenging conditions faced in Germany and Australia.
The company noted the lack of signs of a rebound within recruitment, adding it was premature to determine if there would be a significant recovery in the UK following the Labour Party’s decisive victory in the General Election.
The group warned that expected operating profits are estimated around £105 million, slightly beneath consensus forecasts varying between £106 million to £113 million.
Hays’ announcement follows in the wake of competitor PageGroup, which issued a profit warning on Tuesday subsequent to reporting a 12% decrease in gross profits to £224.3 million in the three months leading up to end of June. Furthermore, this decline amplified throughout the quarter.
Hays also disclosed reductions to its consultant workforce by a further 18% year-on-year during the three months to the end of June, while back-end staff numbers also fell by 9%.
During the quarter, 12 offices were either closed or merged, leaving 236 at the close of the financial year, as part of wider expense cutting initiatives saving approximately £60 million annually.
Chief executive of Hays, Dirk Hahn, commented: “Market conditions remained challenging in the quarter.
“Overall, we continued to see longer-than-normal ‘time-to-hire’, impacted by low levels of confidence.
“Given this backdrop, we have remained focused on driving consultant productivity and tight cost control.
“Given ongoing global uncertainties, in the near term we expect our key markets will remain challenging.
The recent publication indicates that net fees in the UK and Ireland fell by 17% on a like-for-like basis. Similarly, Australia and New Zealand saw a drop of 22%, Germany saw a reduction of 17%, and the rest of the world division witnessed an 11% decrease.
“In the UK and Ireland and France we expect a subdued summer, and it is too early to determine when we will see a meaningful recovery,” Hays commented.