- Earnings in line but dividend cut
- Job market not yet turned up
- Analyst predicts downgrades
While on the one hand, today’s (21 Aug) full-year results from recruitment firm Hays (HAS) were no worse than expected, on the other there was no sign the gloom surrounding the job market is set to lift any time soon, leading one broker to suggest earnings downgrades were likely.
The shares initially traded slightly higher at 65p, but sellers turned out in force driving the price down as much as 5.2p or 8% to 58.3p shortly after the open.
STUCK IN A RUT
For the 12 months to the end of June, the group reported net fee income of £972 million, 13% down on the previous year, and an operating profit of £45.6 million, down 57% but in line with market expectations.
Losses per share were 0.49p against 0.31p a year earlier, prompting a 59% cut in the total dividend to 1.24p from 3p per share.
‘Market conditions remained challenging during the year, with economic and political uncertainty weighing on confidence, increasing 'time-to-hire' and reducing placement volumes,’ commented chief executive Dirk Hahn.
‘Despite making significant strategic and operational progress towards our long-term ambitions, our overall financial performance was impacted by these headwinds.’
The firm said trading in July and August had been in line with its expectations, ‘with no significant change to trading momentum from the fourth quarter’, although with September being a key month it was too early to assess the quarterly trend.
DOWNWARD PRESSURE
‘Hays’ latest results underline how fragile confidence remains in the global jobs market, with ongoing economic and political uncertainty extending hiring timelines and significantly impacting the group’s profits. The decision to cut its dividend for the year comes as little surprise given the severity of its current issues’, said Julie Palmer, partner at Begbies Traynor.
‘Unfortunately, as long as tariff disputes remain on the agenda and until some stability emerges, the timing of any recovery in activity and the recruiter’s fortunes will remain difficult to predict.’
Given July and August showed no change on the previous quarter's trend, ‘the absence of inflection suggests downward pressure to FY26 consensus operating profit estimates’ added Jefferies’ analyst Simon Lechipre.
