Recruiter Hays warns on profits after December slowdown

In an update for the three months to the end of December, the company said group net fees were down 10%, having fallen 15% in December alone.

As a result, and despite ongoing actions to reduce costs, the recruiter now expects first-half pre-exceptional operating profit of around £60m, which is below consensus expectations of £73m.

Chief executive Dirk Hahn said: "Overall market conditions became increasingly challenging through the quarter, including a clear slowdown in most markets in December, notably in our perm businesses as client and candidate decision-making slowed.

"Temp volumes remained broadly stable sequentially through the quarter, but declined year-on-year as we did not see our normal seasonal step-up in worker volumes."

Hahn said it was too early to say if December's weakness reflects a sustained market slowdown or some placement deferrals. However, the company expects near-term market conditions to remain challenging.

"Consequently, we accelerated our cost reduction and efficiency programmes, while focusing on increased operational performance and rigour. Looking ahead, our strategy is increasingly focused on enhancing our leading positions in the most attractive and skill-short markets globally, including Germany, non-perm and enterprise clients," he said.

At 0920 GMT, the shares were down 12% at 95.05p.

Victoria Scholar, head of investment at Interactive Investor, said: "Hiring of permanent staff tends to ebb and flow with the economic cycle. The sluggish global growth backdrop combined with tighter monetary policy has dampened business appetite to pile on additional fixed staffing costs. And while temporary workers typically pick up the slack, Hays said it didn’t see the ‘normal seasonal step-up in worker volumes’ dealing a double blow to the recruitment firm.

"Today’s slide reverses much of the rebound in the stock seen since the lows in October. Over a 12-month period shares are down by over a fifth."