Net fees at recruitment firm Hays plummeted by a third in the latest quarter, as coronavirus pressed paused on hiring and caused a huge spike in unemployment around the world.
The FTSE 250 company, which provides recruitment services in 33 countries globally, reported a dent in hiring in every region in the world, with the UK and Ireland taking the biggest hit.
Like-for-like net fees in the group’s temporary and permanent businesses fell 34 per cent in the four months to 30 June.
Net fees in the UK and Ireland slumped 42 per cent over the quarter, driven by a 46 per cent drop in the private sector and a 30 per cent fall in the public sector, as the company cited “extremely tough market conditions” during the coronavirus pandemic.
London slightly outperformed the UK average, but still notched a 37 per cent slump in net fees, while the North West declined by a whopping 53 per cent.
Fees in the accountancy and finance and office support sectors both fell 53 per cent, while construction and property took a 51 per cent hit.
Shares fell more than three per cent to 122.8p in early trading this morning, with figures released today by the Office for National Statistics (ONS) doing little to quell investor fears.
ONS data showed that the number of paid employees in the UK fell by 649,000 between March and June. Meanwhile, the number of hours worked dropped at the fastest pace on record, suggesting that the headline jobs figures underestimated the true level of unemployment.
Hays slashed staff bonuses for the year, after cost reductions meant the group just broke even during the fourth quarter.
The recruitment firm also reported a 31 per cent fee drop in Australia and New Zealand and a 32 per cent drop in Germany, which were both “heavily impacted by the effect of the pandemic”. Business confidence remains low in Germany while clients closely control costs, Hays reported, particularly in the manufacturing and automotive sectors, where fees slumped 72 per cent during the quarter.
Net fees in the Americas sank 30 per cent over the last four months, with the US taking an 18 per cent hit, helped slightly by significant exposure to IT services.
It comes after a difficult year for the recruitment firm, after it issued a profit warning in January, blaming political uncertainty around Brexit negotiations.
The group raised £196m net of fees via an equity raise in April, which helped bolster the firm’s balance sheet ahead of the pandemic. Hays said: “Our financial strength underpins our strategy and gives us significant confidence for the future, despite highly uncertain markets.”
Commenting on the group’s performance, Hays chief executive, Alistair Cox said: “The pandemic has severely impacted all our markets globally. As it developed, our priority was to look after all our people and to support our business as it adjusted immediately to new realities.
“Facing conditions far harsher than any I have known, our business stood up well to that test. I am immensely proud of the commitment and innovation shown by all our colleagues in helping our clients and candidates deal with the crisis. Overall, we have both protected our business, while taking actions to appropriately reduce costs.
“With our strongest ever balance sheet and market leading positions in key businesses, we are confident we can take further market share and will invest in organic opportunities to accelerate our return to growth.”