Hays’ profit slides 78% as COVID-19 hits net fees and turnover in H1

In an announcement on Thursday, Hays plc (LON: HAS) said that its profit before tax in the fiscal first half came in 78% lower on a year over year basis. The company attributed the decline to the ongoing Coronavirus pandemic that weighed on its net fees and turnover in recent months.

Hays plc was reported about 2% up in premarket trading on Thursday but lost close to 3.5% on market open. Here’s what you need to know about the capital markets.

Hays’ turnover prints at £2.76 billion in fiscal H1

Hays plc reported £21.1 million of pre-tax profit for the six months that concluded on 31^st December. In the comparable period of last year, its profit before tax had printed at a significantly higher £95.6 million.

At £2.76 billion, the recruitment company’s turnover in fiscal H1 was also lower than last year’s £3.10 billion. Hays noted £422.8 million of net fees in the said period that represents a 24% year over year decline. The British multinational said that it struggled in several markets in recent months, including Australia, Germany, Ireland, and the United Kingdom.  

In an earlier report published in October, the human resources services provider had revealed a 30% annualised decline in its first-quarter net fees.

The board refrained from proposing an interim dividend on Thursday in a bid to cushion the economic blow from the COVID-19 crisis that pushed global businesses into freezing new hiring to conserve cash. Ordinary and special dividends, however, are expected to be resumed in August when the company published its final results.

In separate news from the United Kingdom, Smith & Nephew said on Thursday that its full-year profit slumped due to the ongoing health emergency.

CEO Alistair Cox’s comments on Thursday

The start of the new year, as per Hays plc, was also slower, but activity caught pace and matched pre-Christmas levels by the first week of February. CEO Alistair Cox commented on the financial update on Thursday and said:

“Resilience, together with the investments we have made across our business, delivered improving profit momentum through the half with overall trading distinctly stronger than we had earlier anticipated.”

Hays plc performed fairly downbeat in the stock market last year with an annual decline of roughly 25%. At the time of writing, it is valued at £2.65 billion and has a price to earnings ratio of 50.93.