Hays H2 Earnings Call Highlights
Hays (LON:HAS) reported an 8% decline in like-for-like net fees to £906 million for the year ended June 30, 2026, while pre-exceptional operating profit rose 3% to £48.6 million as cost reductions and higher consultant productivity offset weaker recruitment demand.
New Chief Executive Officer Mark Dearnley used the preliminary-results presentation to introduce the company’s “Momentum” strategy, which aims to concentrate Hays on specialist recruitment markets, deploy more technology to support consultants and improve profitability over time.
“Momentum is first and foremost a growth strategy,” Dearnley said, adding that Hays had returned to year-on-year profit growth in the second half of fiscal 2026. The company is targeting an increase of more than 50% in consultant net-fee productivity over time and a conversion rate of more than 25%.
Strategy centers on specialist recruitment and technology
Dearnley said the strategy was developed following discussions with clients, candidates and employees. He said clients continued to value a consultant-led recruitment process, supported by technology, particularly for evaluating interpersonal skills such as leadership, communication and motivation.
Hays plans to focus on 16 countries with a combined addressable market of £100 billion, six global specialisms and higher-value roles. The six global specialisms are technology, finance, construction and property, engineering, life sciences, and human resources. Countries may retain a limited number of additional local specialisms where Hays sees an attractive opportunity and a path to leadership.
The company will offer three categories of products: recruitment, which includes temporary and permanent placements; solutions, covering managed service provider and recruitment process outsourcing activities; and services, which includes statements-of-work activity and Hays’ German project-based contracting operations.
Hays is developing a next-generation digital platform and AI-enabled tools intended to improve search, matching and administrative processes. Dearnley said its “Smarter Meetings” AI agent is already being used to capture structured information and actions from client and candidate conversations, with permission.
During the question-and-answer session, Dearnley said an updated version of Hays’ core CRM platform had been rolled out across Asia-Pacific and was being prepared for Southern Europe. He also said the company’s new AI-enabled search-and-match engine was in an alpha trial in Australia, with further trials planned before year-end. Hays expects to scale the technology in months rather than years, he said.
Cost reductions support profit growth
Chief Financial Officer James Hilton said operating costs fell 8%, or £70 million, during the year. Payroll costs declined £68 million as consultant headcount was reduced 12% and non-fee-earning headcount fell 13%. The company also delivered £4.5 million of property savings and £3.5 million in overhead savings.
Hays achieved £50 million of annualized cost savings in fiscal 2026, three years ahead of schedule, Hilton said. The savings included £25 million from finance, technology and back-office transformation, £15 million from sales restructuring, and £10 million from closing or consolidating 74 offices globally.
Because much of the cost action occurred in the fourth quarter, about £20 million of the benefit was recognized in fiscal 2026, with the remaining £30 million expected in fiscal 2027. Hays is targeting a further £50 million of annualized structural savings in fiscal 2027, primarily across back-office and middle-office functions.
Consultant productivity increased 7% during the year and has now increased for 11 consecutive quarters after adjusting for seasonal effects, according to Hilton. Productivity in the U.K. and Ireland rose 14%.
The restructuring program resulted in exceptional costs of £89.6 million, including £45.1 million for sales and back-office restructuring, £26.6 million related to office consolidation or exits, and an £8 million loss on the disposal of operations in the Czech Republic, Denmark, Hungary, Luxembourg, Romania and Sweden. Hays also recorded goodwill and intangible-asset impairment charges.
Hilton said the group expects another significant exceptional restructuring charge in fiscal 2027 as it pursues the further cost-savings target, although the board intends to materially reduce exceptional costs thereafter.
Regional performance was mixed
- Germany: Temporary and contracting fees were resilient, while permanent recruitment remained difficult amid lower demand and slower customer decisions. Construction and property fees rose 44%, supported by infrastructure and energy-sector activity.
- U.K. and Ireland: The division returned to a £4 million operating profit from a prior-year loss. Hays closed 30 offices and launched a statements-of-work services business in the second half.
- Australia and New Zealand: Operating profit more than doubled to £8.5 million, aided by productivity gains, a focus on higher-skilled roles and the closure of 11 offices.
- Rest of World: The division reported a £5.1 million operating loss for the full year but returned to profitability in the second half. Spain and Portugal delivered record profit performances, while France remained challenging.
Group temporary and contracting fees declined 5%, with volumes down 4%, while permanent recruitment fees fell 12% and volumes dropped 14%. Hays said its average permanent-placement fee increased 2% as it targeted higher-value roles.
Cash generation and current trading
Cash from operations totaled £92 million, representing cash conversion of 189%, and Hays ended the year with net cash of £20.1 million. Free cash flow was £22 million after restructuring cash costs, tax and interest payments. The company said it expects fiscal 2027 capital expenditure of £30 million to £35 million to support technology investment.
The board proposed a final dividend of 0.29 per share, bringing the full-year dividend to 0.44 per share and representing dividend cover of 2.8 times.
Looking ahead, Hilton said trading in July and August had been in line with expectations, with no meaningful change in activity levels from the fourth quarter across contracting, temporary or permanent recruitment. He said September, which accounts for about 40% of quarterly fees, would provide a more meaningful indication of post-summer trading conditions.
Hays expects consultant headcount to remain broadly stable in the first quarter while it continues to implement structural efficiency programs through fiscal 2027.
About Hays (LON:HAS)
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