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Back in August, recruitment giant Hays (HAS) sweetened the disappointing news that it had scrapped its final dividend by emphasising that since the year-end it had seen a modest improvement with the easing of lockdown restrictions. But, as they say, that was then. It’s a very different story today,
Back at the tail-end of summer it felt like we really had turned a corner. Eat out to Help Out saw restaurants and town centres bustling, those who braved the risk of quarantine on their return, could jet off on a summer holiday and with kids packing their school bags again after six months off, it felt like the worst was over.
Today it’s a very different picture yet again though. And not for the better. With the furlough scheme coming to an end and the jobless numbers mounting, the corner we might all have hoped to have well and truly turned by now, has disappeared into a cloud of rising second-wave infection numbers. Instead, as Cineworld demonstrated with the closure of every single one of its cinemas both here in the US for the forseeable future, and with the loss of a staggering 45,000 jobs, things are getting worse, not better.
And so it continues with one of Britain’s biggest pub operators, Greene King, now also preparing to close dozens of venues - some permanently - and shed hundreds of jobs following a slump in trade after the introduction of the 10pm hospitality curfew.
It’s not the situation any of us wants and its certainly not going to do recruitment provider Hays any favours. It relies on companies hiring, not firing or making staff redundant in order to make its money. But all the signs are that the trading update we get from Hays next Thursday, won’t make for light reading. Instead we can expect more detail on the impact of the forced closures that have already paralysed so many sectors of the economy.
You can see where Hays was coming from, back in August. According to data analysed by the BBC, UK employers planned 58,000 redundancies that month. That was a far cry though from the 150,000 planned job cuts in both June and July, which all in all took the total number of job cuts to 498,000 during just the first five months of the Covid crisis.
Of course, Hays felt the effects of those cuts. The hiring group, which operates in 33 countries covering sectors from IT to construction, has itself cut 1,000 jobs already. For the year to the end of June, pre-tax profits at the recruiter fell 63% to £86.3 million year-on-year as net fees slipped 12% to £996.2 million. Growth, which was clearly already slowing pre-pandemic during the first half, with fees down 2%, saw the second-half immediately heavily impacted by Covid-19. Its fourth quarter fees were 34% lower. Germany, the company's biggest market, saw fees fall 13% and operating profits down 41%.
Jobless numbers are mounting here and still rising across Europe and the US. A second nationwide lockdown anywhere would be further bad news for Hays and even without one it doesn’t look like 2021 will see anything like the Lazarus style return it needs. Investors will have to be patient if they stick with Hays at all.
More on Hays PLC
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