Hays (LON:HAS) used its trading update call for the six months ended December 31, 2025 to outline a continued difficult recruitment market, particularly in permanent hiring, while emphasizing cost actions, productivity gains, and strategic repositioning. Chief Financial Officer James Hilton also confirmed a CEO transition, with CEO Dirk Hahn stepping down for personal reasons and Chief Digital and Technology Officer Mark Dearnley appointed interim CEO while the board searches for a permanent replacement.
Challenging markets drive lower fees and profit
Hilton said global recruitment markets “remain challenging,” with permanent recruitment weaker than temporary and contracting. Group net fees fell 9% in the first half to £453 million on a like-for-like basis. Temporary and contracting net fees declined 7%, while permanent net fees fell 14% as “low client and candidate confidence” contributed to reduced activity and longer time to hire.
Pre-exceptional earnings per share were 0.46 pence, down 43% year-on-year, driven by lower operating profit and a higher effective tax rate. The pre-exceptional tax rate rose to 44.8%, which Hilton attributed primarily to tax losses in some countries and disallowable items. Hays expects an FY2026 effective tax rate of about 45%.
Regional performance mixed; improvements in the UK & Ireland and ANZ
In Germany, net fees declined 11%, with Hays citing resilience in contracting and a more challenging temp environment due to exposure to automotive. The division delivered £20.6 million in operating profit. Hilton also pointed to growth in construction and property, which rose 40%, driven by infrastructure and energy-related activity, lifting the specialism’s share of net fees from 4% in FY2024 to 8% in the half. However, fewer working hours—particularly among enterprise clients in construction, infrastructure, and public sector—were a headwind.
In the UK and Ireland, net fees declined 9%, but the division returned to profitability, posting £2 million in operating profit after losses in the prior year. Hilton said the private sector was more resilient than the public sector, and that technology—its largest specialism—returned to positive year-on-year growth for the first time in three years. Enterprise solutions also grew, and the business delivered “strong productivity growth” and cost control.
In Australia and New Zealand, net fees declined 3%, but operating profit tripled to AUD 4.2 million. The division returned to growth in permanent recruitment in Q2 for the first time in three years, and Hilton cited 5% growth in enterprise solutions and a 4% increase in resources and mining.
In the “rest of the world,” net fees fell 10% and the division swung to a £6.7 million operating loss. EMEA excluding Germany was particularly weak, with France down 20% and loss-making. The U.S. was hit by the loss of a material RPO contract that was brought back in-house, while Asia was mixed, with China and Hong Kong returning to growth and Japan up 1%.
Cost reduction and productivity highlighted as key levers
Hilton said Hays reduced operating costs by 8% year-over-year, or £40 million, partially offsetting pay rises in July 2025 that increased payroll costs by £4 million. Payroll costs fell £33 million through headcount reductions, with consultant headcount down 15% and non-fee earners down 16% year-over-year.
- Property savings of £2.2 million were achieved through the closure of 27 offices over the last 12 months.
- Overhead savings of £2.6 million were delivered, mainly in travel, entertainment, and marketing spend.
- Annualized savings included £9 million from finance and technology transformation programs and back-office restructuring, and £6 million through restructuring sales operations and the global enterprise business.
Consultant net fee productivity increased 7% year-on-year, extending to nine consecutive quarters after adjusting for seasonality. Hays cited productivity growth of 15% in the UK and Ireland, 7% in ANZ, and 3% in Germany.
Hilton said the company delivered a further £50 million per annum of savings in the first half, and noted it has now achieved £80 million per annum of savings over the last two and a half years. He added that Hays expects to make “substantial further progress” in the second half, and described a “Hays Digitise” program aimed at improving back- and middle-office efficiency.
Exceptional costs totaled £8.8 million, including £7.3 million related to redundancies and £1.5 million related to transformation programs. Hilton said further exceptional restructuring costs are expected in the second half due to ongoing restructuring and transformation work.
Cash generation, balance sheet, and dividend
Hays reported cash from operations of £43.7 million, representing 217% cash conversion. The company ended the half with net cash of £40 million. Working capital was a £14.5 million inflow, driven by reduced temp fees and a one-day improvement in days sales outstanding.
Free cash flow was £16.9 million after tax payments of £10.6 million, net interest of £4.1 million, and £12.1 million of cash exceptional restructuring charges. The company paid £4.6 million of dividends, invested £10.1 million in CapEx, and spent £1.2 million on share purchases for PSP issuance.
Hilton said the cash flow benefited year-on-year following a “full pension buy-in” that eliminated prior deficit funding contributions of around £80 million per annum. He also reduced FY2026 CapEx guidance to £30 million from £35 million, citing lower-than-expected technology investment costs.
The interim dividend was set at 0.15 pence per share, consistent with the revised dividend policy and capital allocation framework announced with FY2025 results. Hilton reiterated a commitment to maintaining balance sheet strength and targeting 2x–3x dividend cover while investing in the business.
Current trading and outlook: focus on H2 improvement and digital platform rollout
On current trading, Hilton said the “return to work” in temp and contracting was “solid overall” and in line with the prior year and expectations. The UK and Ireland and ANZ were modestly ahead of the prior year, while Germany was slightly behind, with continued softness in automotive and ongoing lower working hours consistent with Q2 trends.
Hilton said consultant headcount capacity was appropriate and expected to remain broadly stable in Q3. He added that the company expects the cost base to come down “a little bit” over the next six months as structural programs continue.
Responding to a question on the second-half profit outlook, Hilton said Hays expects an improved performance in H2 and referenced a full-year operating profit consensus of £46 million, implying £26 million in the second half. He noted that, even in a “relatively flat” market, Hays typically sees a slightly better second half due to working-day phasing, while acknowledging that visibility remains limited beyond a few weeks and that March is an important month for the company.
On France, Hilton disclosed that the business lost about £3.5 million in the first half (before allocation of central overhead) and said the cost base has been reduced, with more actions underway. He said management’s ambition is to return France to a breakeven position in Q4.
Hays also outlined recent portfolio changes, exiting Thailand in December and closing recruitment operations in Mexico in January, following the closure of Chile and Colombia in July. Hilton said the four exited countries represented around £7 million of net fees per annum in aggregate and that each was loss-making.
Finally, Hilton described progress on a next-generation digital platform built on Hays’ proprietary systems, including CRM, databases, and vendor management technology. He said an updated CRM is live across Asia Pacific, with broader rollout planned through the second half, enabling more AI agents to be embedded into workflows. As an example, he said an AI “meetings” tool is saving roughly 20–30 minutes of administrative time per client or candidate interview, while also improving the volume and quality of structured data captured, which Hays expects to improve matching and analytics over time.
