Recruitment agency Hays recorded flat revenue growth in the last quarter of its financial year, it said today, as UK income declined in a “tougher” private sector market.
The FTSE 250 firm blamed a lack of appetite in the UK and Ireland’s private sector for a two per cent fall in fees.
Elsewhere fees earned on job changes in Germany rose three per cent year on year in the three months to the end of June, while Australia and New Zealand revenue sank five per cent.
Hays’ share price fell 1.7 per cent after the trading update to 149p.
However, Hays reiterated full-year operating profit guidance, saying it will hit market expectations of £248m.
Chief executive Alistair Cox called the quarter a “solid end” to the financial year, pointing to a one per cent growth in underlying fees.
But he added that performance had come against a backdrop of “tough comparatives, more mixed macroeconomic conditions and some signs of reduced business confidence”.
“Europe saw mixed conditions, although our largest market of Germany delivered solid underlying growth, and southern Europe performed well. The UK was understandably more subdued, particularly in the private sector,” he said.
“Looking ahead, we are mindful of economic and political uncertainties and will continue to focus on driving consultant productivity, while making selective investments in our key markets to reinforce our market leadership,” Cox added.
Barclays warned that the flat growth has the potential to hurt profits next year.
“Although consensus operating profit was met today, lower growth will have some operational gearing in 2020,” the bank said in a research note.
“Generally, it appears candidate confidence is holding up but corporate caution has increased due to weaker economic trends.”
Other recruiters have suffered similar hits to growth amid an environment of political uncertainty as the UK approaches an October Brexit deadline and awaits the results of a vote for a new Prime Minister.
Robert Walters saw UK profits fall to £25.2m in its latest quarter from £27.3m a year ago, blaming a lack of hiring appetite due to Brexit.
Rival Page Group warned of lower profits last week, sending shares down 10 per cent.
Hays’ trading update came as statistics showed the UK’s unemployment rate has fallen to a 45-year low.
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