Hays plc, the sixth-largest global staffing firm, reported today net fees (gross profit) decreased by 2% in its fiscal fourth quarter ended 30 June on a ‘like-for-like’ basis. On an actual reported basis, net fees also fell by 2%.

The group reported solid growth in Temp business, up 4% (LFL) over the year with volumes sequentially stable through the quarter. Growth was driven by the group’s actions to increase fee margins and its focus on higher value markets, together with the positive effects of wage inflation.

However, Perm was down 9% (LFL), with reduced client and candidate confidence. Fees continued to be supported by positive margins, mix and wage inflation. 

Hays noted that the 2% fall in Q4 is against a strong prior year growth comparative, and reflecting tougher market conditions, particularly in Perm.

The group also highlighted that, despite tougher market conditions, FY23 operating profit is expected to be in line with market consensus of circa £196 million.

Alistair Cox, Chief Executive, said, “We delivered a resilient Q4 performance against a tougher market backdrop, and we expect FY23 operating profit will be in line with market expectations. Growth was again driven by Temp & Contracting, our largest business and key strategic focus, where volumes were stable overall, however Perm hiring processes continued to lengthen.”

“Germany performed strongly, EMEA produced good fee growth and we also grew fees with our Enterprise clients globally, as we leveraged our network and capabilities to deepen customer relationships,” Cox said.

“Despite macroeconomic uncertainties, our key markets remain characterised by skill shortages and wage inflation,” Cox added. “Our early management actions to increase average fee margins and control our costs have underpinned our performance, and consultant productivity is good overall, with headcount aligned to current market conditions. Our balance sheet strength and flexible business model mean we are well-positioned to adapt to market conditions, while remaining firmly focused on our clear long-term growth strategy.”

Unless otherwise stated, all growth rates discussed in this statement are LFL (like-for-like) fees, representing year-on-year organic growth of continuing operations at constant currency.

Within Germany, temp & contracting was up 12%, driven by volume growth and positive pricing. The group noted a record performance in Perm, up 10%.

UK & Ireland net fees were down 7%. Temp fees were flat, however conditions were tougher in Perm, down 15% as activity levels slowed. Most regions traded broadly in line with the overall UK&I business, with the largest region of London decreasing by 10%. In Ireland, the business decreased by 4%.

In Australia & New Zealand, Temp fees were down 9% with reduced activity in the public sector. Hays noted continued tough conditions in Perm, down 22%.

In Rest of World,net fees were down 4%, despite a good performance in EMEA ex-Germany, up 5%. Asia decreased by 8%, with China again challenging. The Americas was also tough, down 21%, the company noted.

Meanwhile, consultant headcount decreased by 3% in the quarter and by 5% over the year, as the company focused on driving productivity which remained at good levels overall, despite more difficult markets.

Fees in the largest global specialism of Technology declined by 3% versus a record prior year performance, with Temp outperforming Perm.

The second largest, Accountancy & Finance, increased by 2% with a stronger performance in its Senior Finance practice. Engineering, the third largest specialism, produced a fee record and grew by 15%, although construction & property was tougher, down 10%. Direct outsourcing fees in Enterprise clients also produced a fee record, up 2%, and Hays said it continued to have a good pipeline of opportunities.

In May 2023, Hays acquired Vercida Consulting, a UK-based Diversity, Equity and Inclusion consulting business which provides organisations with advisory services to improve their ability to attract, retain and progress talent from diverse backgrounds. The group’s initial investment was circa £1 million, with further amounts payable based on achieving its ambitious growth plans.

In its FY 2023 outlook, Hays said volumes remain stable overall in Temp and Contracting, with modestly lower numbers of new assignments offset by greater contract extensions, and it continues to benefit from positive effects of mix and margins. In Perm, incoming job flow is modestly down year-on-year, but was broadly sequentially stable through the quarter, and we continue to see lengthening of time-to-hire.

Hays last traded at £102.10, down 2.30% on the day and 5.37% above its 52-week low of £96.90, set on 7 July 2023. The company has a market cap of £1.66 billion.