Hays warns of profit decline amid hiring slump in Germany
- Hays has reported an annual profit forecast that may fall short due to a weak hiring market, particularly influenced by the automotive sector in Germany.
- The company has experienced a decline in activity driven by a decrease in client and candidate confidence amid economic uncertainty.
- As a result, Hays is taking measures to improve fee income and efficiency while anticipating continued market challenges.
In recent reports, the recruitment firm Hays has announced that it is anticipating a decline in its annual profits, primarily due to a sluggish global jobs market influenced by uncertainty surrounding economic conditions. The German automotive sector, which is a significant market for Hays, is experiencing decreased hiring activity as companies navigate potential high tariffs on U.S. exports. This downturn is compounded by a general lack of confidence among clients and candidates, resulting in a slowdown in permanent recruitment across various sectors. Despite the challenges with permanent placements, the temporary and contract work sectors seem to remain more stable. Hays noted that its operational metrics have deteriorated over recent months, leading to a substantial cutback in staffing levels accompanied by cost-reduction strategies. The uncertainty from U.S. trade policies has further inhibited hiring decisions in Western Europe, particularly within substantial markets like Germany, where many companies are holding off on recruitment. The company has specifically highlighted the automotive industry as facing significant pressure, as car manufacturers confront potential tariffs as high as 25% on exports to the United States. Industry leaders are actively seeking negotiations with U.S. President Donald Trump to mitigate these impacts and maintain smoother trading relationships. Hays is projecting a notable decrease in its earnings, indicating a fresh forecast of about £45 million in pre-exceptional operating profit for the fiscal year ending in June, significantly down from previous analyst predictions of £56.4 million. Looking ahead, Hays acknowledges that they expect these challenging market conditions to persist into the forthcoming fiscal year. Their strategy moving forward is focused on improving efficiency and fee income. Consequently, the firm faces the daunting task of restructuring to accommodate ongoing uncertainty, further compounded by threats from geopolitical tensions and the complex landscape of international trade that continues to affect hiring dynamics throughout the region.