Hays said its profit for the year through June would fall more than 57% to around £45 million (US$60.3 million), hurt by broad weakness in permanent hiring as confidence among employers and job seekers was low due to economic uncertainty.
Analysts were expecting £56.4 million, according to a company-compiled poll.
US President Donald Trump has announced wide-ranging tariffs on trade partners, including the EU, and wants to reduce the US goods trade deficit with the EU that are making hiring decisions more challenging, even as trade talks continue.
“In previous quarters we’ve talked about softer markets and longer time to hire, but we have seen through this quarter a reduction in the new number of jobs coming through, as well as continued length and time to hire,” Hays CFO James Hilton said on a call with analysts.
He added the British company’s permanent business was probably about 10% behind where it was expected to be in the quarter.
“All in all, not a good start for earnings season of the staffing sector as the weakness in (permanent hiring) could impact also the gross margins of the other players,” ING analyst Marc Zwartsenburg said in a note.
Hays’ shares fell as much as 20% to a 13-year low early today before recovering some loses to trade 12.2% lower by 8.41am.
Shares of rival recruiters PageGroup, Randstand, Robert Walters and Adecco fell between 3.5% and 8%.
“While Hays’ biggest market, Germany, and the UK were the most challenging with permanent hiring, regions such as France, Belgium and Netherlands, also remained subdued,” Hilton said.
However, temporary hiring and contracting was more resilient broadly, with the exception of Germany where temporary hiring was also weak because of exposure to the autos sector.
Trump’s levies are projected to slow Germany’s growth in the near term and result in the loss of 90,000 jobs within a year.
The country’s auto sector, which relies heavily on exports to the American market, had already been in decline due to weak European demand and foreign competition.