Deteriorating outlook for economy, weakness in banking
LONDON (Reuters) — British recruitment firm Hays said business was getting increasingly tough in many of its regions and it would struggle to find growth from a dwindling set of healthy markets in a weak global economy next year.
Shares in Hays, which specializes in placing workers in accountancy, construction and IT jobs and makes almost 70 per cent of fees overseas, fell seven per cent to 71.2 pence.
The recruitment sector has suffered heavily in the last year as a deteriorating outlook for the economy and weakness in the banking sector has led to companies delaying hiring and workers being more cautious about changing jobs.
Earlier this month, rival recruiter Michael Page International said it saw no sign of improvement in the job market.
"Our markets over the last 12 months have got progressively more difficult and a number of them do not have any momentum in them today," Hays chief executive Alistair Cox said on Thursday.
"That will make it difficult to grow the business in that environment because the markets today feel worse than they did a year ago."
In another sign of weakening confidence, WPP, the world's largest advertising group, cut its annual growth forecast on Thursday, saying that customers in the United States and western Europe were becoming increasingly cautious.
Hays posted an 11 per cent rise in pre-tax profit to £122 million (C$191 million) for the year ended June 30, in line with expectations. It said it would continue to focus on countries such as Brazil, Australia and IT and engineering-led Germany, which are helping to ease the pain of many slowing markets elsewhere.
Seymour Pierce analyst Caroline de La Soujeole said she would likely reduce profit forecasts for 2013: "Whilst this is a good set of results given the uncertain macroeconomic background, markets have become increasingly more challenging as the year progressed which does not augur well for 2013."
Full-year group net fees rose eight per cent to £734 million (C$1.1 billion) on a like-for-like basis, with Brazil and Germany up 30 per cent, reflecting a strong international performance. Overseas fees were up 16 per cent overall.
Hays said its British market became increasingly tough as the year progressed, with net fees down seven per cent as both public and private sector clients cut jobs and halted hiring as government austerity measures started to bite.
The company said it had not seen any improvement in a moribund banking sector, meaning its financial services markets in Asia and Britain would remain tough. Growth had slowed across much of continental Europe and in non-resource-related work in Australia.
The group said it would try to protect profit by continuing to reduce costs in tougher markets by cutting its own staff.