Shares in Hays PLC (LSE:HAS) fell 14% in early trading on Thursday after the recruiter warned that full-year profit would come in well below expectations due to a sharp slowdown in permanent hiring.
The company now expects pre-exceptional operating profit of around £45 million for the year to June, down from the analyst consensus of £56.4 million.
It said activity levels weakened through the final quarter as client and candidate confidence remained low in the face of economic uncertainty.
Net fees, which represent the group’s gross profit, are expected to decline 9% year on year in the fourth quarter. Permanent hiring fees fell by 14%, while temporary and contracting work proved more resilient, down 5%.
The decline in hiring activity was broad. Net fees in the UK and Ireland were down 13%, while Germany, the company’s largest market, saw a 5% drop, reflecting a slowdown in the automotive sector.
Conditions were similarly weak in Australia, France and the rest of Europe.
Although costs have edged down, Hays said profits had been hit by the fixed nature of its cost base. It expects current market conditions to persist into the new financial year.
The stock fell 9.8p to 60.4p.