What Hays (HAS) Said on Its Q1 Earnings Call

Key Points

• Hays’ Q1 fiscal 2027 group net fees fell 3% year over year, with a 7% decline in permanent recruitment outweighing a 1% like-for-like decline in Temp & Contracting. Germany and the U.K. remained weak, while the Americas and Asia delivered growth.
• Consultant productivity rose 8% year over year, its 12th consecutive quarterly increase, as headcount declined 9%. Hays delivered £10 million of its targeted £50 million in fiscal 2027 structural cost savings during the quarter.
• Management expects near-term conditions to remain stable, with temporary and contracting recruitment more resilient than permanent hiring. Hays is advancing AI and technology initiatives and reviewing strategic options for operations in seven markets.

Hays LON: HAS reported a 3% year-over-year decline in group net fees for the first quarter of fiscal 2027, as weaker permanent recruitment activity continued to outweigh a more resilient performance in temporary and contracting recruitment.

On a like-for-like basis, excluding country exits and the disposal of operations in six European countries, Temp & Contracting net fees fell 1%, while permanent recruitment fees declined 7%. Chief Financial Officer James Hilton said the group’s Temp & Contracting volumes were sequentially stable, while permanent recruitment markets remained mixed but broadly stable.

The year-over-year decline in Temp & Contracting volumes eased to 3%, including declines of 2% in Germany, 7% in the U.K. and Ireland and 9% in Australia and New Zealand. Rest of World Temp & Contracting volumes rose 5%. In permanent recruitment, a 12% drop in volumes was partly offset by a 5% increase in the average fee, reflecting Hays’ focus on higher-salaried roles.

Productivity and Cost-Saving Progress

Hays said consultant net fee productivity increased 8% year over year, extending its run of growth to 12 consecutive quarters. Productivity has risen 21% in aggregate over the past three years, according to Hilton. The company cited its targeted allocation of consultants toward business lines with stronger productivity and long-term growth opportunities.

Consultant headcount, excluding the effect of disposals and exits, declined 1% sequentially and 9% from a year earlier. Hays is targeting an additional £50 million of annual structural cost savings in fiscal 2027 and said it delivered £10 million during the first quarter. Since the start of fiscal 2024, the company has delivered £125 million in annual structural savings.

Net debt was about £45 million at quarter-end, in line with expectations. The company said the balance reflected normal seasonal cash flows, exceptional cash payments and share purchases connected with its non-dilutive all-colleague share award.

Germany and U.K. Remain Soft

Germany, Hays’ largest market, posted a 6% decline in net fees. Temp & Contracting fees fell 5%, as a 2% decline in volumes and a 3% impact from lower working hours and mix weighed on performance. Contracting volumes rose modestly, helped by more new starters and fewer assignment terminations, while average working hours remained stable during the quarter.

Permanent recruitment fees in Germany fell 8%, though the rate of decline eased and trading was sequentially stable. Technology fees rose 3%, while Construction & Property grew 28%, driven by infrastructure and energy-sector activity. Engineering fees declined 23% and finance fees fell 9%. Germany’s consultant productivity rose 11%, while consultant headcount was down 16% year over year.

During the question-and-answer session, Hilton said Hays had reduced its exposure to Germany’s automotive sector over the past four years. The company now has about 600 temporary workers in the sector, compared with about 2,000 previously, he said. Hays has instead expanded its focus on areas including infrastructure, energy, renewables, technology, engineering, life sciences and financial services.

In the U.K. and Ireland, net fees declined 5%, with Temp & Contracting down 3% and permanent recruitment down 9%. Private-sector fees fell 6%, while public-sector fees declined 3%. Finance and Construction & Property grew 2% and 1%, respectively, but technology was down 2%. The company said increased focus on higher-skilled roles helped lift average candidate salaries by 9% in permanent recruitment and 8% in Temp & Contracting.

Growth in Americas and Asia

Australia and New Zealand net fees declined 3%, with private-sector growth of 3% offset by a 14% fall in public-sector fees. Construction & Property grew 5% and Resources & Mining rose 10%, while technology and finance declined. Consultant productivity in the region increased 3% to a nine-year high.

Rest of World net fees were flat on a like-for-like basis. The Americas grew 9%, with the U.S. up 8% and Canada up 12%. Hilton said Construction & Property demand was supported by data-center, infrastructure, energy and renewable projects, while recently won solutions contracts also contributed to growth.

Asia net fees increased 6%. Greater China grew 27%, supported by improved permanent recruitment activity, while Japan rose 2%. Hilton said Japan’s Temp & Contracting business grew strongly, although permanent recruitment was disrupted by an extended holiday period that affected placement start dates.

France remained difficult, with net fees down 16%. While Temp & Contracting revenue in France rose 15%, the company said its substantial exposure to junior permanent recruitment and office-support roles continued to weigh on results.

Outlook and Strategic Initiatives

September net fee growth was negative 2%, compared with the first-quarter decline of 3%. Hays said it expects market conditions to remain stable in the near term, with Temp & Contracting showing greater resilience than permanent recruitment. Half of the group is now delivering positive year-over-year net fee growth, up from 30% in the preceding quarter.

The company said it has launched a strategic partnership with Synthesia to support skills development, AI adoption and analysis of consultant performance. It also began a phased European rollout of its OneTouch 26 customer relationship management system after deploying it in Asia-Pacific.

Hays is also exploring strategic options for operations in Belgium, Brazil, Greater China, Malaysia, the Netherlands, Singapore and the UAE, with Hilton saying the company is in advanced discussions on several processes. The company did not provide consultant headcount guidance for the second quarter, saying it intends to continue reallocating resources toward its most attractive business lines.

About Hays (LON:HAS)

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