(Reuters) - Hays, one of the world’s biggest recruiters, expects to face losses in the summer after reporting a 34% drop in fourth-quarter net fees on Thursday, as companies slowed new hiring to ride out the coronavirus downturn.
The London-listed recruitment firm, which operates in 33 countries, said it had trimmed headcount by 9% in the fourth quarter and the cost base fell 21%, adding that cost reductions helped it break-even in the three-month period.
But it said it expected costs to rise in the new financial year and tough market conditions meant it would be “modestly” loss-making over the summer months.
The company’s FTSE 250-listed shares were down 4% at 121 pence at 0806 GMT.
“To return to profitability, we need the economy to stabilise and, primarily at this stage of countries starting to reopen and people starting to return to work, we need that to be as smooth as possible,” Finance Director Paul Venables told Reuters.
Hays said operating profit for the year ending June 30 was expected to come in between 130 million and 135 million pounds ($163 million-$169 million), down from 248.8 million pounds last year.
Recruiters around the globe have been hammered by a hiring freeze during the health crisis. Peers PageGroup and Robert Walters have reported big drops in net fees.
“The pandemic has severely impacted all our markets globally ... facing conditions far harsher than any I have known,” Hays Chief Executive Officer Alistair Cox said in a statement.
Hays, which is largely focused on hiring for white collar roles, cancelled its dividend in April.
Brokerage Jefferies said Hays’ “formidable” balance sheet should help restore dividends when government support ends.
The company, which in April raised about 200 million pounds in equity, said it had net cash of 365 million pounds.
($1 = 0.7980 pounds)
Reporting by Indranil Sarkar and Yadarisa Shabong in Bengaluru, Editing by Sherry Jacob-Phillips and Edmund Blair