Hays has announced the sale of its operations in six European nations, securing a £4 million cash injection from the disposal. However, the recruitment giant anticipates a non-cash loss on this divestment during the second half of 2026, highlighting the ongoing challenges facing the sector.
The impacted countries – Czech Republic, Denmark, Hungary, Luxembourg, Romania, and Sweden – account for £85 million in net fees, with combined operating profit projected to break even in the next financial year. Initial market reaction saw Hays' stock rise 3% to nearly 38p before falling into negative territory as investors digested the implications.
This strategic move by Hays is set against a backdrop of declining recruitment activity. BDO's employment index hit a 15-year low in March, reflecting persistent caution among businesses regarding cost pressures. Notably, Hays itself reported a 25% decline in operating profit to £20.1 million, attributed to a 9% drop in fees.
The sector-wide struggles are underscored by SThree's recent UK operations downturn, with fees falling 19% to £11.6 million. While the group's US and Japan markets showed growth, the trend suggests a broader slowdown. Recruitment fees serve as a key indicator of economic confidence and business investment in human capital.
The Bank of England's ongoing efforts to manage inflation and interest rates continue to influence business sentiment, with companies often deferring hiring decisions during periods of economic uncertainty. This environment puts pressure on recruitment firms, impacting revenue streams and profitability. FTSE 250 investors will be closely monitoring the effectiveness of these strategic divestments in improving Hays' financial resilience and market position.
Source: Hays, BDO