ii view: recruiter Hays sharpens its focus

Reshaping country of operations portfolio

Chief executive Mark Dearnley said:

“We are pleased to announce the sale of six European countries to a leading private equity investor in European recruitment.

“The board believes Meraki Capital will be an excellent long-term owner, providing a strong platform to further support future growth for its employees and customers.”

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

ii round-up:

Global recruitment agency Hays (LSE:HAS) today announced a scaling down of countries which it operates in, enabling a sharper focus on existing higher-performing and potential markets.

Operations in the Czech Republic, Denmark, Hungary, Luxembourg, Romania, and Sweden have been sold for £4 million to private equity company Meraki. Hays is now considering the sale of a further seven countries and including Belgium, Brazil, China and the UAE.

Shares in the FTSE 250 company rose 4% in early UK trading having come into this latest news down by just over a third so far in 2026. That’s better than a near halving for shares of rival PageGroup (LSE:PAGE). The FTSE 250 index is up 4% year-to-date.

However, as of time of publication (midday), its share price see-sawed, down 1.5% to 35.2p, as investors digested the news. 

Hays recruits across industries including IT, accountancy and engineering with average candidates earning between £35,000 and £200,000.

In aggregate, the 13 countries being exited are expected to produce a broadly break even pre-exceptional operating profit on around £85 million of net fees in the year to late June 2026. That’s around a tenth of all group net fees.

Hays previously exited Thailand in December, then Chile, Colombia and Mexico in March. Under relatively new head Mark Dearnley, Hays is pursuing a refreshed strategy, concentrating investment on 16 higher-performing core markets.

A fourth-quarter trading update to 30 June is due on 10 July. Full year results are likely mid-August.

ii view:

Began over a century ago, Hays today fills over 1,000 jobs per day. Germany generated most fees over its last financial year at 27%, followed by the UK and Ireland at 23% and Australia and New Zealand 17%. All will remain part of its core 16 countries along with France, Austria, Switzerland, Poland, Spain, Portugal, Italy, the US, Canada, Japan, and India.

Recruiting for 21 specialisms, technology-related jobs generated most fees over its last financial year at 25%. Accountancy & finance came next at 15%, followed by engineering at 11%, construction and property 11%, and other areas the balance of 38%.

For investors, tough economic conditions for its two biggest markets Germany and the UK and Ireland, have hindered corporate client and job-seeking candidate confidence, particularly for permanent positions and related fees. A previous cut to the dividend payment now leaves the shares sat on a forecast dividend yield of around 1.2% compared to a prior 4% plus. An estimated future price/earnings (PE) ratio above the three- and 10-year averages may suggest the shares are not obviously cheap, while the broad threat to the jobs market from AI remains difficult to predict.  

• Stockwatch: why US/Iran deal looks a boon for growth
• Why fund managers are still bullish
• Shares for the future: this AIM share breaks into my top 10

To the upside, focusing management time and investment on higher-performing markets looks sensible. Initiatives to generate cost savings of £45 million per annum by the end  of the full-year 2029 continue to be targeted. A diversity of client industries and geographical locations persists, while the group’s own investment in AI could eventually help improve productivity and profits.   

On balance, and while exposure to eventual economic upturns across core markets offers interest, more cautious investors are likely to continue awaiting evidence of such recovery before adding to any existing shareholdings.  

Positives:

• Business sector and geographical diversity
• Focus on improving efficiency

Negatives:

• Economic outlook uncertainty
• Currency moves can impact

The average rating of stock market analysts:

Strong hold