Hays Share Price Makes 52-Week Low Amid Profit Warnings and Economic Headwinds

Hays share price (LON:HAS) plummeted to a new 52-week low today, hitting 55.70p early before rallying somewhat through the day in closing at 63.10p, down 10.1%. This sharp drop underscores growing investor concerns about the company's profitability and its ability to navigate challenging market conditions.

The company warned it is expecting a dramatic decline in operating profit, with a projected 57% drop to £45 million in 2025, falling below market expectations of £56.4 million. This decline is primarily driven by challenges in the German market, which represented 65% of Hays' operating profit in 2024, and global hiring slowdowns.

The grim forecast from the company reflects a slowdown in global hiring trends, particularly in Germany's vital automotive sector, which accounted for a substantial 65% of Hays' operating profit in 2024. The sector has been notably impacted by international trade tensions and broader economic uncertainties. Implications of U.S. tariffs, implemented under President Trump, are expected to further strain Germany's economic growth, potentially costing the country 90,000 jobs within a year.

This economic pressure has translated into weakened permanent hiring globally. Temporary hiring has also seen a dip within Germany, reflecting the automotive industry's struggles. Hays anticipates a 5% decline in like-for-like net fees in Germany for the fiscal year, with a more significant 9% drop expected group-wide in the fourth quarter. The company also projects continued hiring challenges into 2026.

In April, Hays reported a 9% decline in like-for-like net fees for the quarter ending March 31, confirming the challenging market conditions. The company warned that these conditions are likely to persist into fiscal 2026, citing economic instability in Europe and global trade tensions. In response, Hays is implementing cost-saving restructuring measures, aiming to reduce expenses by £30 million annually by fiscal 2027.

The company's operating profit for the period ending December 31 was £25.5 million, compared to £60.1 million the previous year. However, Hays reported consistent profitability in the United States, marking an improvement from monthly losses seen a year ago.

Hays is now trading at levels not seen for more than a decade, as a 21% decline since the start of this year continues the bearish trend that has been apparent since back in 2021. A glance at the 5 year chart below, showing a 49% decline will do little to cheer Hays bulls, although the average price target from analysts of 89.40p does demonstrate the presence of some support on the street.

Today's selloff, and new lows may have set a near-term floor, with the subsequent intraday rally through the afternoon setting the stage for the final session of the week.