Hays Shares Jump After Recruiter Lifts Profit Guidance to Top of Range

Hays shares rose sharply on Friday after the recruiter said cost cuts and steadier fee trends would lift annual profit to the top of forecasts.

Hays plc (LSE:HAS) shares surged on Friday after the recruitment group said cost-cutting and resilient fee trends mean full-year profits are on track to land at the top of the range analysts had forecast, in a fourth-quarter trading update published as UK hiring activity remains weak.

Shares in Hays are trading at 40.10p by mid-morning on Friday, up 11.8% from Thursday’s close of 35.86p, having risen as high as 41.34p during the session. The stock remains well below the 67.48p high it touched over the past year but is now comfortably clear of the 28.68p low it hit in the same period.

Profit guidance beats expectations

In the update, covering the three months to 30 June, Hays said full-year pre-exceptional operating profit is expected to land at the top of the £37 million to £46 million range analysts had pencilled in. Group net fees fell 5% on a like-for-like basis in the quarter, a smaller decline than the market had expected, according to Yahoo Finance UK, which also reported that consultant net fee productivity grew for an 11th consecutive quarter as the group pushed through efficiency measures.

Management attributed the stronger showing to gains in consultant productivity and tighter cost control, though the update flagged a series of one-off costs tied to further streamlining of the business. Hays has also completed the disposal of six European country operations as part of a wider exit from non-core markets.

Hays has spent the past two years cutting costs and consultant headcount as global hiring, particularly for permanent roles, has stayed weak. The group appointed Mark Dearnley as permanent chief executive in May, having served as interim boss since February. It is reported that Chief financial officer James Hilton hosted a call with analysts and investors on Friday alongside head of investor relations Kean Marden.

Sentiment on Hays had been turning less negative before Friday’s update. Morgan Stanley raised the stock to Equal-weight in June as part of a broader reassessment of European staffing shares. The most recent analyst rating on Hays ahead of the update was a Hold with a 33p price target.

Hays has yet to confirm a date for full-year results, though the scale of the one-off restructuring costs flagged on Friday should become clearer when it reports. Until then, Friday’s update is the clearest signal yet that its cost-cutting drive is starting to offset a hiring market that has yet to properly recover.