(Bloomberg) -- Hays Plc’s full-year pretax profit plunged 91% as the recruiter was battered by “increasingly challenging” market conditions in both permanent and temporary hiring through the year.
Pretax profit slumped to £14.7 million ($19.2 million) from £192.1 million, missing the £54.7 million average analyst estimate. Profitability was “significantly impacted” in all three of the largest markets of Germany, Australia and the UK by low confidence levels and longer-than-normal time to hire, Hays said in a statement.
“Closing placements became materially harder through the year,” the London-listed company said. “This had a significant impact on our average placement volumes per consultant.” That hurt volume productivity, which was about 15%-20% below normal levels, causing “a material drag” on group profitability.
The company is trying to mitigate the impact by restructuring operations and repositioning the business. While this resulted in annualized cost savings of around £60 million, it booked a £37.8 million in non-cash asset writedowns on top of a previously reported £42.2 million cash exceptional charge.
Hays expects to deliver a further cost savings of about £30 million a year by the end of fiscal 2027 through back-office efficiency programs, mainly in the technology and finance functions.
Though trading in July and August was in line with expectations, “it is too early to assess trends” ahead of the key September trading month, the company said.
The stock, which was down 13% this year before today, fell as much as 1.3% in London.
Read: Hays Plunges After Cutting Guidance on Weak December
(Corrects to amend comparable estimate for pretax profit.)
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