(Reuters) -Sluggish hiring, particularly in Germany's automotive sector, prompted British recruiter Hays to warn on Thursday that its annual profit would fall more than expected, sending its shares
Hays Shares Plummet as Permanent Hiring Declines and Job Openings Drop
By Raechel Thankam Job and Pushkala Aripaka
(Reuters) -Recruiter Hays warned on Thursday that a reduction in new job openings recently and ongoing delays in hiring decisions would lead to a bigger-than-expected drop in profit for the year, knocking down its shares and those of European rivals.
Hays said its profit for the year through June would fall more than 57% to around 45 million pounds ($60.3 million), hurt by broad weakness in permanent hiring as confidence among employers and job seekers was low due to economic uncertainty.
Analysts were expecting 56.4 million pounds, according to a company-compiled poll.
U.S. President Donald Trump has announced wide-ranging tariffs on trade partners, including the European Union, and wants to reduce the U.S. goods trade deficit with the EU that are making hiring decision more challenging, even as trade talks continue.
"In previous quarters we've talked about softer markets and longer time to hire, but we have seen through this quarter a reduction in the new number of jobs coming through, as well as continued length and time to hire," Hays CFO James Hilton said on a call with analysts.
He added the British company's permanent business was probably about 10% behind where it was expected to be in the quarter.
"All in all, not a good start for earnings season of the staffing sector as the weakness in (permanent hiring) could impact also the gross margins of the other players," ING analyst Marc Zwartsenburg said in a note.
Hays' shares fell as much as 20% to a 13-year low early on Thursday before recovering some loses to trade 12.2% lower by 0841 GMT. Shares of rival recruiters PageGroup, Randstand, Robert Walters and Adecco fell between 3.5% and 8%.
While Hays' biggest market, Germany, and the UK were the most challenging with permanent hiring, regions such as France, Belgium and Netherlands, also remained subdued, Hilton said.
However, temporary hiring and contracting was more resilient broadly, with the exception of Germany where temporary hiring was also weak because of exposure to the autos sector.
Trump's levies are projected to slow Germany's growth in the near term and result in the loss of 90,000 jobs within a year. The country's auto sector, which relies heavily on exports to the American market, had already been in decline due to weak European demand and foreign competition.
($1 = 0.7460 pounds)
(Reporting by Raechel Thankam Job and Pushkala Aripaka in Bengaluru; Editing by Sherry Jacob-Phillips, Bernadette Baum and David Evans)
