Hays PLC (LSE:HAS) shares leapt to a three-month high as profit for the financial year was guided to come in at the top end of market forecasts after cost cuts offset another quarter of weak recruitment activity.
The recruiter said like-for-like net fees fell 5% in the three months to 30 June, the final quarter of its financial year, beating the average analyst forecast of a 6% decline.
Temporary and contracting fees fell 3%, while permanent fees dropped 7% as hiring softened through the quarter. Germany, its largest market, remained stable, with average hours worked in line with expectations.
The FTSE 250-listed company expects pre-exceptional operating profit to be at the top of the £37-£46 million range of analyst forecasts, where the average is £43.5 million.
Chief executive Mark Dearnley said the decline eased, "driven by good Temp & Contracting growth in several of our countries and stable average hours worked in Germany despite slightly softer Perm activity through the quarter.
"We continue to make strong progress with our structural cost and productivity initiatives and currently expect FY26 pre-exceptional operating profit will be at the top of the consensus range following a return to strong YoY growth in the second half."
Annualised cost savings of about £50 million were said to have been made during the financial year, exceeding management's £45 million target three years early.
But Hays expects to book an exceptional restructuring charge of about £40 million, alongside a £30 million impairment linked to office consolidation.
Net cash ended the period at £20 million, compared with net debt of about £15 million three months earlier.
On the outlook, the company said: "Although we have limited forward visibility, we are mindful of heightened global macroeconomic uncertainty and expect near term market conditions to remain challenging, with greater resilience in Temp & Contracting than in Perm."
The shares jumped 10.9% to 39.76p in the first hour of trading on Friday.
Analyst Sanjay Vidyarthi at broker Panmure Liberum noted that the Q4 net fee income outcome was an improvement from Q3's 8% fall.
"We think that the recently announced sale of operations in six countries, with another seven planned, is the right thing to do and should meaningfully improve the operational gearing of the business.
"We see this as a bold strategic move, but an earnings inflexion point is likely to required before the shares re-rate, given how long the downturn has lasted now and the weakened state of the balance sheet/dividend payout prospects."
** UPDATE: Adds share price and analyst comments **
