FTSE 250-listed recruitment firm Hays PLC (LSE:HAS) posted some underwhelming financial metrics for its UK and Ireland segment in today’s preliminary results for the year ending June 30.
As a major player in the recruitment scene, Hays is often looked at as a bellwether for the wider workforce economy.
So an operating profit decline of 34% to £28.7 million across UK&I serves as a warning shot for an employment market that has been running very hot for very long.
Declining UK&I profits were heavily weighted to the second half, correlating with a steadily increasing unemployment rate in the UK economy from February 2023 onwards.
Source: tradingeconomics.com
Notably, permanent employment volumes underperformed considerably against temporary employment volumes, suggesting fewer positions in full-time employment for those seeking work.
Across the whole year, perm volumes fell 13% while temp volumes decreased just 6%.
As a cyclical business, Hays is highly exposed to economic downturns and higher unemployment rates, although a strong showing in its largest market Germany (operating profit up 29% to £100.2 million) managed to bolster Hays’ overall results.
For this reason, analysts at UBS have maintained a 'buy' rating for Hays, with a price target set at 155p against a publication price of 103.5p.
UBS also noted that the company declared a 5% rise in its core dividend per share (DPS) and an additional special DPS of 2.24p, reflecting its robust financial standing.
This brings the total cash return for the year to approximately £160 million, slightly above UBS's estimate of £150 million.