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Brexit, Germany slowdown and Australia fires hit hiring at UK recruiter Hays

Tom Belger
Finance and policy reporter
The Thyssen-Krupp steelworks in Germany as the country's manufacturing slowdown hit hiring at recruiter Hays. (Photo by Markus Matzel/ullstein bild via Getty Images)

The global recruitment firm Hays (HAS.L) has warned a hiring slowdown in Europe’s three biggest economies hit its sales and profits last year.

It blamed Brexit uncertainty, Germany’s manufacturing slowdown, strikes in France and bushfires in Australia for falling client recruitment in its half-year report published on Thursday.

Its operating profits crashed by almost a fifth from £124.1m ($160.3m) in the second half of 2018 to £100.1m in the second half of last year. Net fees, its turnover minus pay to temps and other agencies, dropped by 3% from £568m to £553m in the period.

A “sharp slowdown” in Germany, its biggest market, proved a significant drag as manufacturing and carmakers in particular looked to slash costs. It said the weakness had also spread to large financial and services firms, echoing signs in German business survey data last year.

Hays said profits in Germany were down 20%, and said it had slashed its consultant headcount in Germany by 4% year-on-year.

Read more: UK recruiter PageGroup slashes jobs as vacancies dry up

Profits slid 21% in its UK and Ireland business. It blamed Brexit uncertainty ahead of the December election for an 8% drop in private sector fees, which make up 70% of its fees income. Permanent recruitment was particularly hard hit as client confidence fell.

Fees slid 6% in accountancy and finance and 8% in construction and property, some of its largest UK sectors. But fees were up as client spending grew in IT, where fees rose 8%, and healthcare, up 15%.

In Australia, the company said the safety and wellbeing of staff remained its priority amid the “tragic and unprecedented” bushfires. It said client spending had been “heavily impacted,” with its profits sliding by 14%.

Alistair Cox, chief executive of Hays, said: “Fee growth slowed significantly through the half, impacted by increased uncertainties and reduced business confidence in most of our major markets.

“We expect near-term macro conditions to remain difficult and are mindful of continuing uncertainties, including the coronavirus.”

Read more: Record number of Brits in work - and on zero-hour contracts

He said the company would focus on “cost management,” but saw potential growth in IT and the US market.

Rival recruiter PageGroup (PAGE.L) also warned last month Brexit uncertainty and disruption had hit confidence and spending among its clients in the UK. It said it expected Brexit uncertainty to be “ongoing” in 2020, and to continue to make trading harder.

Hays stock chart. (Yahoo Finance)