Hays plc

Good day and thank you for standing by. Welcome to the highest PLC trading update for the quarter ending 31st of March, 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kian Martin, Head of Investor Relations and M&A. Please go ahead.

Good morning, everyone, and thank you for joining us on a busy reporting day for the sector. I'm Kian Martin, Head of Investor Relations, and I'm joined here today by James Hilton, Chief Financial Officer, to present Hayes Q326 results. Before we begin, please be aware that this call is being recorded and the replay is accessible using the number and code provided in the release. Please be aware that our discussions may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions on future events. There are risk factors which could cause actual results to differ materially from those expressed in or implied by such statements. CAES disclaims any intention or obligation to revise or update any forward-looking statements that have been made during this call, regardless of whether these statements are affected by new information, future events, or otherwise. I'll now hand you over to James.

Thank you, Kian. Good morning, everyone, and thanks for joining us today. I'll present the key points and regional details of today's training update before taking questions. As usual, all net field growth percentages are on a like-for-like basis versus prime year, unless stated otherwise. and consequently exclude our previously communicated ethics from operations in Chile, Colombia, Thailand and Mexico. Group net fees increased by 8%, with Tencent Contracting down 6% and Perm down 12%. I'm pleased to confirm that strong consulted net fee productivity growth and cross-discipline continues to offset lower net fees. Although near-term market conditions are likely to remain challenging, and we remain mindful of heightened global macroeconomic uncertainty, we currently expect FY26 pre-exceptional operating profit will be in line with consensus. I'd like to highlight the following key items from the results. Tenant contract net deeds decreased by 6% as we saw a modestly stronger return to work in the UK and Ireland in May and Z, and the year-on-year declining volumes and average hours worked in Germany is in line with our expectations during the quarter. Group temp and contracting volumes decreased by 5% year-on-year, including Germany down 9%, UK and Ireland down 8%, ANZ down 6%, and the rest of the world up 2%. Home debt fees decreased by 12%, driven by a 15% decline in volumes, as conversion of activity in UK and Ireland ANZ reduced modestly versus Q2. This was partially offset by a 3% increase in the group average home fee, supported by our actions to target higher salary roles. We continue to manage our consulting capacity on a business-wide basis, and despite challenging markets, our actions deliver 7% year-on-year growth in average consultant net fee productivity in G3, including notable increases in the UK&I and the rest of the world businesses. On a seasonally adjusted basis, productivity has now increased for a sector-leading 10 consecutive quarters, consultant headcount reduced by 3% in the quarter and by 14% versus prior year. We've continued to make strong progress towards our structural cost saving program with a further 15 million per annum savings delivered in Q3. We've now achieved 30 million annualized savings in FY26, making excellent progress towards our target of 45 million by FY29. In total, we've now delivered 95 million annualized cumulative structural savings since the start of FY24. Our non-consortant headcount exited the quarter down 7% year-on-year. And the group's net debt position was circa 15 million, which is in line with our expectations and reflects normal seasonal cash flow. I will now comment on the performance by each division in more detail. Our largest market of Germany saw fees down 11% year-on-year. Temporary contracting fees decreased by 11%, with volumes down 9%, and a further 2% impact from negative hours and mix. Temporary contracting volumes remained solid overall, with return to work in line with prior year, and the year-on-year decline in average hours worked during the quarter, predominantly in our public sector and enterprise clients, was in line with our expectations. These sectors hired in anticipation of fiscal stimulus, hence our placement volumes of the main resilience, but hours' work remained softer in the quarter after federal budget approval was delayed. Firm was sequentially stable through the quarter, and the year-on-year decline in net fees eased to 10%. At the specialism level, technology and engineering, our two largest specialisms, were flat year-on-year and down 27% respectively, the latter impacted by ongoing, subdued performance of the automotive sector. Accounting and finance was down 22%, But construction and property performed strongly once again with 37% net fee growth, driven by our focus on infrastructure and the energy sector. And it now contributes 9% of our net fees in Germany. Consultant headcount decreased by 6% in the quarter and by 15% year-on-year. Net fee productivity increased by 5%, driven by our ongoing focus on resource allocation, and we made strong progress with our structural cost-saving initiatives. In UK and Ireland, fees decreased by 10%, with a modestly stronger return to work in terms of contracting down 6%, but firm remains subdued and was down 15%. Fees in the private sector declined by 8%, while the public sector was tougher, down 13%. At the specialism level, technology was flat versus prior year, while construction and property and accountancy and finance decreased by 8% and 6% respectively. Enterprise fees declined by 4%, while office support was flat as our actions just target higher salary roles, offset lower volumes in the junior roles. Consultant headcount decreased by 4% in the quarter and 16% year-on-year. Consultant net fee productivity increased by 11%, and we made further good progress in improving operational efficiency. Once again, a key driver has been our greater focus from our consultants on high-skilled roles, consistent with our five-leaver strategy. As a result, year-on-year growth of average candidate salary remained at 8% per term in Q3 and accelerated to 9% in template contracting. As expected, our sustained focus on cost discipline, including ongoing initiatives to optimise our office portfolio and delay our management, has driven a further structural improvement in costs. We've made good progress towards building a higher-quality focused business and consequently anticipate improved profitability in the second half. In ANZ, fees decreased by 2% year-on-year, with modestly improved momentum in terms of contracting, but PERM was more subdued. Temporary and contracting decreased by 1% year-on-year, with a return to work modestly ahead of previous years. PERM net fees down 6% slipped back into modest year-on-year decline, as conversion of activity to placement became more challenging. The private sector decreased slightly by 1%, with the public sector down 6%. At the specialism level, construction and property, our largest specialism, with 21% of ANZ net fees, increased by 6%, with office support and accountancy and finance, were by 7% and 5% respectively. Technology declined by 11%. Australian net fees were down 2%, with New Zealand at minus 11%. ANZ consultant headcount was up 2% through the quarter, but decreased by 4% year-on-year. Driven by our focus on resource allocation, consultant net free productivity grew by 7%. As with UK and Ireland, the key driver of our profit recovery has been greater focus from our consultants on higher skilled roles. As a result, year-on-year growth in our average salary of our PERM placements was maintained at 5% in Q3. In our rest of world division, comprising 24 countries, like-to-like fees decreased by 6%. Temp moved back into positive year-on-year growth, and fees were up 3%, but firm declined by 12%. As a reminder, our total actual growth rate includes the impact of our previously communicated exits from operations in Chile, Colombia, Thailand, and Mexico. In the near-ex-Germany, fees decreased by 8%, France, our largest rest of the world country, remained tough and loss-making, with fees down 17%, but our actions to address productivity and costs are being delivered on plan, and we continue to expect an improved performance in H2. Southern Europe performed strongly, with Spain and Portugal again achieving record quarterly net fees, up 17% and 6% respectively, and Poland grew by 2%. In the Americas, fees decreased by 7%, the U.S. and Canada were down 8% and 2% respectively. We've previously highlighted a substantial bid pipeline with large enterprise clients in North America, and I'm pleased to share that several contracts have now reached final close, with mobilization anticipated over the coming quarters. Brazil, down 12%, was again challenging. Asia fees increased by 8%, with improved activity overall through the quarter. Japan grew by 33% driven by strong growth in our 10th and contracting business and an easier comparable. Mainland China grew by 16% and Hong Kong by 9%. For the rest of the world as a whole, consultant headcount increased by 3% in the quarter and by 14% year on year. Before moving to the current trading, I wanted to take a few moments to update you on our strong strategic progress during the quarter. As we've previously shared with you, our initiatives to improve consultant net fee productivity in real terms through our five levers and structurally improve our cost base will be key drivers of profit recovery. Amidst challenging markets, we are executing well and continue to make significant operational progress. We continue to invest in high potential and high performing business lines and scale back or exit those with low performance and potential. As previously communicated, we have exited four countries over the last year, and we'll continue to review our country portfolio in the medium term. Consultancy productivity of 7% in the quarter has increased for sector-leading 10 consecutive courses, driven by careful allocation of consultants to business lines with the most attractive productivity and long-term structural growth opportunities. Greater focus from our consultants on high-skilled roles and our investments to provide them with the best tools. Within Temp and Contracting, net fee growth was positive in three of our eight focus countries in Q3. And at the group level, Temp and Contracting now contributes 65% of net fees. In Enterprise Solutions, we've recently signed several new contracts which we expect to contribute to fees over the coming quarter. And our programs have structurally reduced our cost base to performing well. with 95 million per annum aggregate structural savings now secured since the start of FY24. We continue to make strong progress with our initiatives and expect the full financial benefits to build over time. Moving on to current trading and guidance. To date, we have observed minimal impact from developments in the Middle East, but we remain vigilant. Although we have limited forward visibility, given the heightened levels of global macroeconomic uncertainty, We expect near-term per market conditions to remain challenging, but expect greater resilience in terms of contracting to continue. We are pleased once again with our net lead productivity through Q3 and believe our consultant capacity is appropriate to current market conditions and therefore expect it to remain broadly stable in Q4 as we balance focused investment in high-performing and high-potential business lines with improving productivity in more challenging areas. We will continue to structurally reduce our cost base to position pays strongly for when end markets recover and expect to make further substantial progress in Q4. As a result of the acceleration of our cost programme, we have incurred around 20 million of exceptional restructuring costs to date in fiscal 2026. Finally, there are no material working day impacts anticipated in Q4 26. I'll now hand you back to the administrator and we're happy to take your questions.