Hays plc, a London-based global staffing firm, reported today that net fees, or gross profit, was £583.3 million (US$742.6 million) for the six months ended Dec. 31, 2023, a 9% decrease on a like-for-like basis compared to the previous year. The company has a number of restructuring initiatives underway to improve performance in key markets.

The decrease in fees was due to lower volumes in both temp and perm, partially offset by increases in average fees per placement, which were driven by management actions and the impact of wage inflation.

Turnover amounted to £3.53 billion (US$4.50 billion), down 5% on a like-for-like basis. Hays is reporting turnover rather than revenue.

The higher net fee decline compared to turnover was due to relatively resilient performance in temp fees versus perm, according to the company.

“As previously reported, the half-year saw increasingly challenging conditions, with a clear slowdown in most perm markets in December, while our larger temp and contracting business again showed greater resilience,” Chief Executive Dirk Hahn said.

Hahn said he is “not satisfied with our profit performance.”

He continued, “Our focused strategy targets the many structural growth opportunities we see, while driving profitability through increased resilience, operational rigor and enhanced execution. We will also be guided by our ‘golden rule’ for our businesses, namely that operating profit growth should exceed fee growth, which in turn should exceed headcount growth through the cycle. As our end markets stabilize and then recover, I am confident we can return to, and then exceed, our previous peak profits. While our markets today are challenging, and we are making some difficult decisions, Hays is a strong business with a great team of talented colleagues, and I am excited about what we can achieve together.”

Temp net fees were down 5% on a reported basis and 3% on a like-for-like basis. Perm net fees fell by 17% on a reported basis and were down 15% on a like-for-like basis.

Unless otherwise stated, all growth rates below are LFL (like-for-like), YoY (year-on-year) net fees and profits, representing organic growth of continuing operations at constant currency. WDA refers to working day adjusted.

The company’s largest market of Germany saw net fees increase by 3% to £186.2 million (US$237.0 million). Temp and contracting, (82% of Germany fees), increased by 3%, or up 5% WDA.  This was driven by 1% growth in volumes and 5% from the positive impact of price and mix, partially offset by 2% from two fewer working days and 1% from slightly lower average hours worked. Perm, 18% of Germany fees, increased by 2%. This included a 10% increase in the average perm fee, partially offset by 8% lower perm volumes.

In the UK and Ireland, net fees decreased by 14% to £118.1 million (US$150.3 million). Perm markets slowed materially through the half year, impacted by negative GDP and decreased client and candidate confidence, with temp remaining broadly stable sequentially but down over the year. UK&I costs decreased by 8%, driven by headcount reductions, and costs will reduce further in second half as a number of restructuring projects complete.

Temp (56% of UK&I) decreased by 11%, with temp volumes also down 11% and the mix of price and margin flat over the year. The perm business saw fees decrease by 17%, with volumes down 28%, partially offset by an 11% increase in average perm fee.

In Australia and New Zealand, net fees decreased by 19% to £74.3 million (US$94.6 million). Cost decreases of 10% were driven by 15% lower average consultant headcount in the half year, partially offset by the company’s own cost inflation. Hays changed its ANZ leadership team in the second half of 2023.

Temp (63% of ANZ) decreased by 15%, with volumes down 17%, but remained sequentially stable through the half year. Fees continued to be impacted by the federal government’s policy decision to reduce the use of temps in the public sector and by reduced activity in some large enterprise clients. Perm fees decreased by 25%, with volumes down 21% and slowing through the half year, including a particularly difficult December, according to the company.

Net fees in the Rest of World division, which comprises 28 countries, decreased by 11%. Fees in temp (37% of RoW) were resilient and flat year over year, with perm down 16% as markets slowed through the half-year.

In EMEA excluding Germany (63% of RoW), net fees decreased by 4%. France, the largest RoW country, delivered flat fees; however, activity slowed through the half year. Belgium and Spain increased by 6% and 1% respectively, and the UAE delivered record fees, up 26%.

Switzerland and Poland decreased by 4% and 23% respectively. In response to market conditions, Hays reduced EMEA ex-Germany headcount at the end of the half-year.

In the Americas (21% of RoW), net fees decreased by 26%, and with tough conditions throughout the region. The US declined by 26%, Latin America by 27% and Canada by 28%. Given the extent of the fee declines, the Americas was modestly loss-making in the half year, according to the company.

Asia (16% RoW) net fees decreased by 14%, with China down 22%. Japan and Malaysia decreased by 2% and 5% respectively.

In response to market conditions, Hays restructured its Americas and Asia businesses, including a right-sizing and delayering of operational management and a reduction in non-fee earner headcount.

Share price

Shares in Hays closed down 0.94% today in London to £94.70 (US$119.55). They were 8.73% above their 52-week low.