Hays swings to FY pre-tax loss but underlying profit improves

(Sharecast News) - Hays shares fell on Thursday after the recruiter said it swung to a full-year pre-tax loss due to restructuring charges, although there was an improvement in underlying profit. In the year to the end of June, the company swung to a statutory pre-tax loss of £54.5m from a profit of £1.5m a year earlier.

Net fees declined 8% to £905.5m and the dividend per share was cut to 0.44p from 1.24p.

Hays said it had made "excellent" progress against its FY29 structural cost savings ambition with around £50m annualised savings secured three years ahead of schedule. Due to these and other actions, however, it incurred a £89.6m exceptional charge.

Operating profit before exceptional items rose 3% to £48.6m.

Hays said temporary & contracting and permanent recruitment net fees fell 5% and 12% respectively. Although temporary & contracting net fees were relatively resilient through the year, permanent recruitment was subdued, Hays said, as it saw modestly lower activity and placement conversion through the year in markets outside North America, Southern Europe, and Asia. This more than offset improvements to its mix and pricing.

Chief executive Mark Dearnley said: "We delivered a return to strong year on year profit growth in the second half with full year pre-exceptional operating profit increasing by 3% although reported results were impacted by exceptional costs related to the rapid initial execution of our Momentum strategy."

At 0905 BST, the shares were 2.6% lower at 69.60p.

Axel Rudolph, chief technical analyst at IG, said: "Hays has endured another difficult year, with weaker demand hitting fees, but the underlying business has shown resilience as productivity gains and cost savings helped support operating profit.

"The restructuring charge makes the headline results look considerably worse, but the launch of its new Momentum strategy suggests management is determined to sharpen its focus and build a leaner business. With trading currently in line with expectations, investors will now want to see whether this more focused approach can finally deliver a sustainable recovery in growth."

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