Recruitment giant Hays has revealed it is slashing costs by around another £30 million after seeing annual profits almost wiped out amid a global pull-back in hiring.
The group revealed pre-tax profits plunged 91% to £14.7 million in the year to June 30 as net fees slumped 12% to £1.1 billion.
On an underlying basis, pre-tax profits halved to £94.7 million.
It said worldwide hiring conditions have since remained “challenging” over the summer, but that it is “too early to assess trends” for the full-year given that September is a key month for recruitment.
In the UK and Ireland, it said activity has been “relatively subdued since the general election and conditions remain challenging”.
Chief executive Dirk Hahn, who took on the job at the end of August last year, has been leading a swingeing cost-cutting programme to reduce annual costs by £60 million in the face of the tougher jobs market conditions.
Hays said it axed 15% of its workforce over the year – including cutting more than 1,500 consultant roles – and shut or merged 17 offices worldwide, including 12 between April and June.
The firm warned of more back office job cuts as part of efforts to cut annual costs by about a further £30 million over the next three years, largely across its finance and technology operations.
“This will be achieved via removing duplicated costs, selective outsourcing opportunities, further standardisation and globalisation of processes, and further expansion of our shared service centres,” Hays said.
But the group said its consultancy workforce will remain “broadly stable” in the first quarter of the new financial year, with its total workforce expected to “decrease slightly” due to the further back office cuts.
We saw increasingly challenging market conditions through 2023-24 in both permanent and temporary (recruitment), with low confidence levels and longer-than-normal ‘time-to-hire’
Dirk Hahn, Hays
Mr Hahn said: “We saw increasingly challenging market conditions through 2023-24 in both permanent and temporary (recruitment), with low confidence levels and longer-than-normal ‘time-to-hire’, and our profitability was significantly impacted, including our three largest markets of Germany, Australia and the UK.
“Against this backdrop, we have focused on enhanced operational rigour, driving consultant productivity and strong cost management, and are determined to build a more resilient Hays.”
The group said election uncertainty held back activity in many markets, especially in the UK and across Europe.
It saw earnings slump 78% in the UK and Ireland to £6.4 million over the year.
On the UK and Ireland performance, it said: “Driven by decreased client and candidate confidence, permanent fees and activity slowed materially through the first half and, after a period of relative stability in the second half, decreased again in the lead-up to the general election.”
Hays has cut its UK and Ireland consultant workforce by 16% to 1,629 and shut 10 offices since December last year, leaving it with 75 in the region.