Recruitment firm Hays has warned over further job cuts after revealing that half-year profits slumped by more than 70% amid a difficult hiring market worldwide.
The group slashed its total workforce by 9% last year to save costs as jobs markets globally slowed sharply, cutting its fee-earning consultants by 12%, and by 7% in the final six months alone, to 7,971.
It cautioned it expects to reduce its total workforce by another 3% to 4% in the first three months of 2024 amid efforts to save around another £20 million in the second half of its financial year, on top of the £30 million in annual savings made between August and December.
Details of the job cuts came as Hays reported pre-tax profits slumping 71% to £27.6 million in the six months to December 31 as net fees tumbled 11%.
The group said the consultancy roles were stripped out through staff turnover as well as “performance management”, with the group taking action to sack consultants when they consistently failed to meet performance targets.
Chief financial officer James Hilton told the PA news agency the group was keeping costs under review over the year ahead.
He said: “We react to the world that we’re seeing.
“The market has got more challenging in the last 12 months and we have been actively managing our costs.
“We will continue to do so.”
Hays has also restructured operations in several regions, including across management teams and back office operations, which saw 3% of non-consultant roles cut in the final three months of 2023, while three offices were shut as it merged sites in some markets.
Dirk Hahn, chief executive of Hays, said it was “making some difficult decisions” in the face of tougher jobs markets.
He said: “The half-year saw increasingly challenging conditions, with a clear slowdown in most permanent markets in December, while our larger temporary and contracting business again showed greater resilience.
“We acted decisively to drive consultant productivity, better align our operations to market conditions and opportunities, and reduce costs.”
He added: “This said, I am not satisfied with our profit performance.”
Hays is reviewing business lines and its country presence as part of its overhaul, with the group having a presence in 33 countries.
The firm said that it had seen New Year job flow and activity levels in line with that seen in the second half of 2023, while it said temporary and contracting volumes were down 8% year-on-year so far in its the third quarter.
Permanent recruitment fees, accounting for 41% of group fees, tumbled 15% in the half-year, with volumes plunging 25%.
Hays said: “We continue to see slower client and candidate decision-making, leading to a longer time to hire.
“Our key markets continue to be supported by skill shortages, and we expect to see some further fee benefit in the second half from the positive effects of wage inflation globally, albeit at lower levels than in the first half, with fee margins stable.”
In the UK and Ireland net fees fell by 14% in the group’s first half, while earnings tumbled 63% to £5.7 million.
It axed 14% of consultant roles in the region, to 1,800 from 2,082 a year earlier.
It said UK and Ireland temporary and contract hiring volumes were down 11% so far in the third quarter, adding that permanent markets “remain tough but are broadly stable, with new job inflows in line with the second quarter”.
Jefferies analysts said that across Hays, “current trading is better than December”, but cautioned it is facing a “tough March comparison” from a year earlier, when the group saw record net fees.