UK's Hays warns of tough hiring market ahead; forecasts profit drop
Like-for-like Q1 net fees down 14%
Shares up 3% in early trade
Hays sees H1 profit below that of prior six months
Recasts, adds shares in paragraph 5, brokerage comments in paragraph 6-7
Oct 11 (Reuters) -Hays HAYS.L on Friday warned that hiring market conditions could remain challenging in the near term as the British recruiter forecast first half profits would be lower than the prior six-month period.
Recruitment firms have been battling sluggish hiring market conditions for the past year amid high interest rates and lower unemployment levels.
"Net fees in the quarter were down, as expected, reflecting the tough market conditions, particularly in permanent (hiring)where we see longer time to hire and low levels of confidence which we expect to continue," Hays CEO Dirk Hahn said in a statement.
The company, which focuses largely on hiring for white-collar roles, said its like-for-like net fees fell 14% in the three months ended Sept. 30.
Shares in the FTSE midcaps firm were up 3% at 88.4 pence in early trade.
Analysts at Jefferies said the fall in quarterly net fee beat its expectations of a 16% drop and was in line with the market's view.
Annual commentary is consistent with current consensus and full year earnings per share estimates are likely to remain unchanged, Jefferies added in a note.
Hays sees pre-exceptional operating profit for the six months ending Dec. 31 to be lower than the prior six-month period. The firm did not provide details on its annual outlook.
Germany, the largest single market for Hays, saw a 13% decline in net fees. Technology, the largest sector in the country, saw a 15% decline.
A Recruitment and Employment Confederation (REC) survey earlier this week showed the permanent job market in Britain extended a two-year downturn in September, although the drop in hiring was slower on a monthly basis.
Peers PageGroup PAGE.L and Robert Walters RWA.L are due to release trading updates on Monday and Tuesday, respectively.
Reporting by Prerna Bedi in Bengaluru; Editing by Subhranshu Sahu and Christina Fincher
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