Profits at recruiter Hays dipped in its latest financial year, hit by the costs of restructuring its operations in Europe and weighed down by faltering economic growth in many of its major markets.
Pre-tax profits for the year to June fell 3 per cent to £231m after the company took £15.1m in one-off charges as Hays moved to cut costs among the ranks of its senior managers in Europe.
Like other UK-listed recruiters such as PageGroup, Hays has moved to diversify its business internationally to insulate against cyclical downturns. But nonetheless the group has found itself battling a macroeconomic slowdown in several of its major markets, including Germany, the UK and Australia.
Weakness in the manufacturing and automotive sectors in Germany, Hays’ largest market, meant fee growth in the country slowed through the year with “increasing signs of cost control and slower decision-making”, the company said. In the UK meanwhile, despite a “solid first half”, the company said fee growth in the fourth quarter had been “understandably more subdued” with economic uncertainty hitting confidence.
Hay’s European restructuring incurred just under £7m in exceptional costs, with the move expected to deliver £5m in annual cost savings. Profits were also hit by a legal ruling last year that has forced companies to equalise pensions provision for men and women, which resulted in more than £8m in one-off costs.
Operating profits, excluding exceptional items, of £249m were roughly in line with guidance given by the company last month.
Chief executive Alistair Cox said the company had “built a highly diversified business”.
“Looking ahead, despite an increasingly tough global economic backdrop, our market positions, combined with our highly experienced global management teams and strong financial position, means I am confident we will continue to appropriately balance our long-term potential with the more challenging markets we currently face,” he said.
