Hays Lifts Profit Forecast on Cost Savings Despite Softer Recruiting Market

Hays Plc (LON:HAYS) raised its annual profit guidance on Friday, signaling that significant cost savings and improved consultant productivity are offsetting a continued slowdown in the global recruitment market that has dampened net fees.

The British staffing company announced it expects pre-exceptional operating profit for fiscal 2026 to be at the top of the current analyst consensus range of £37 million to £46 million. The midpoint of the range, which Hays compiled from 10 analysts, stood at £43.5 million.

Fee Performance Eases in Q4

While the market remains challenging, the decline in hiring activity showed signs of moderating. Group net fees fell 5% on a like-for-like basis in the fourth quarter ended June 30, an improvement on the consensus forecast for a 6% drop.

Performance varied across the company's key regions:

• Germany: Net fees declined 7%, beating expectations for a 9% fall.
• UK & Ireland: Fees fell 8%, slightly worse than the 7% decline analysts had forecast.
• Australia & New Zealand: A 2% slip was recorded, compared to forecasts for flat performance.
• Rest of World: The division saw a 1% decline, significantly better than the consensus estimate of a 5% drop.

"The YoY decline in Group net fees eased to 5% in Q4 driven by good Temp & Contracting growth in several of our countries and stable average hours worked in Germany despite slightly softer Perm activity," Chief Executive Mark Dearnley said in a statement.

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Cost Discipline and Restructuring

A key driver of the improved outlook was the company's aggressive cost management program. Hays said it delivered approximately £50 million of annualized structural cost savings in fiscal 2026, surpassing its target of £45 million a year by fiscal 2029 three years ahead of schedule.

The company is also sharpening its focus on 16 core markets. It completed the sale of operations in six European countries in June and is exploring options for its businesses in several other regions, including Greater China, Brazil, and the UAE. In connection with its global office consolidation, Hays expects to book a restructuring charge of about £40 million and a £30 million impairment on right-of-use assets.

Balance Sheet and Outlook

The company's financial position strengthened during the quarter, ending with net cash of approximately £20 million as of June 30, compared with net debt of about £15 million at the end of March.

Hays is scheduled to publish its full-year results and provide a detailed strategy update on August 20.