Hays PLC (LON:HAYS) shares dropped as the recruitment firm posted a 3% drop in pre-tax profit for the 2019 financial year and warned of lower business confidence in Germany and Britain.
Pre-tax profit fell to £231.2mln in the year to 30 June from a year ago due to higher commission payments, the cost of restructuring operations in Europe and new rules that require companies to equalise pension benefits for men and women.
Net fees – a key measure of gross profit for recruiters – rose 5% to £1.1bn, led by growth in Germany – its largest market.
Germany delivered a 9% rise in net fees to £299.8mln but Hays said growth rates slowed as the year progressed as clients cut back on costs and delayed decision making, particularly in the automotive and manufacturing sectors.
The UK increased net fees by 2% to £263.8mln but concerns about a no deal Brexit led to more subdued growth in the fourth quarter.
The rest of the world division saw net fees rise 8% to £367.6mln, boosted by strong performances in Spain, Italy, Poland, the Americas and Asia.
Chief executive Alistair Cox said the company had “built a highly diversified business” that would help cushion the blow of economic downturns in certain markets.
“Looking ahead, despite an increasingly tough global economic backdrop, our market positions, combined with our highly experienced global management teams and strong financial position, means I am confident we will continue to appropriately balance our long-term potential with the more challenging markets we currently face,” he said.
Shares fell 3% to 134.9p in morning trading.