Good day, and thank you for standing by. Welcome to the trading update for the three months ending 30th of June 2024 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 during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Phillips, Head of Investor Relations. Please go ahead.
Thank you, Sandra. Good morning, everyone. I'm David Phillips, and I'm here with James Hilton, Group Finance Director, to present Hays' Q4 2024 results. 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. Hays 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 will now hand you over to James.
Thank you, David. Good morning, everyone, and thanks for joining us today. I'll present the key points and regional details of today's trading update before taking questions. As usual, all net fee growth percentages are on a like-for-like basis versus prior year unless stated otherwise. Group fees decreased by 15%, with a June net fee exit rate of -18%. Market conditions remain challenging in the quarter, and we continue to see longer-than-normal time to hire in most markets, as both our client and confidence levels remain low, leading to lower levels of activity and longer decision-making. However, despite more difficult trading in Q4, our cost actions mean that we will still expect FY 2024 pre-exceptional operating profit of circa GBP 105 million, around the bottom end of current market expectations. I would like to highlight the following key items from the results.
In our temp business, fees decreased by 12% against a strong prior-year comparator. Group average temp volumes decreased by 7% year-on-year, including Germany down 6%, ANZ down 18%, and the UK&I down 12%. Our average group temp margin was broadly flat year-on-year. In addition, and similar to the trend that we outlined in the last quarter, in Germany, increased client cost controls, together with the impacts of placement mix, drove a 10% reduction in average hours worked per contractor. This led to a circa GBP 8 million fee and profit impact in Q4. Our perm fees decreased by 20%, driven by volumes down 27%, and this was partially offset by a 7% increase in our group average perm fee. We continue to see low levels of client and candidate confidence, and overall perm activity levels reduced through the quarter.
We remain focused on managing our costs and productivity on a business-by-business basis. During Q4, our consultant headcount decreased by 5% and was down 18% year-on-year. Therefore, despite tougher markets, our average consultant productivity improved by 3% year-on-year. We also closed 12 offices in our network in the fourth quarter, ending FY 2024 with 236 offices, down 16 year-on-year. Since the start of FY 2024, our actions have reduced cost per period by GBP 5 million. We have delivered circa GBP 60 million of annualized cost savings, an increase of GBP 10 million versus our previous expectations, and importantly, around GBP 30 million of these savings are expected to be structural. We continue to have a strong balance sheet, with net cash at 30th of June of circa GBP 55 million, an increase of GBP 75 million versus Q3, and in line with our expectations.
I'll now comment on the performance by each division in more detail. Our largest market of Germany saw fees down 17%. Temp and contracting fees decreased by 16% year-on-year. Temp margin was flat versus the prior year, and as I mentioned earlier, volumes declined by 6%, with a 10% reduction in average hours worked. That said, the negative impact of lower contracts and temp hours started to ease through the quarter. As a result, our June temp and contracting fee exit rate in Germany was -13%, which is slightly better than the overall quarter. In perm, activity slowed through the quarter and decreased by 20%. At the specialism level, technology and engineering, our two largest specialisms, were down 19% and 18% respectively. Accountancy and finance was more resilient and down 11%, with construction and property flat, in part supported by our more resilient public sector, which was down 7%.
Consultant headcount decreased by 5% in the quarter and by 9% year-on-year. In U.K. and Ireland, fees decreased by 17%. Temp decreased by 14%, with perm down 22%. Fees in the private sector and the public sector each reduced by 17%, both slower in June given the impact of the election and increased market uncertainty. At the specialism level, accountancy and finance and technology decreased by 20% and 35% respectively. Construction and property decreased by 15%, although engineering was more resilient, up 9%. In Ireland, our fees decreased by 18%. Our consultant headcount decreased by 3% in the quarter and by 16% year-on-year. In ANZ, fees decreased by 22%, although fees were sequentially stable through the quarter. Temp, 67% of ANZ, decreased by 16%, with perm down 32%. The private sector decreased by 23%, with the public sector down 19%.
At the specialism level, construction and property decreased by 23%, while accountancy and finance and technology decreased by 21% and 19% respectively. New Zealand remained tough, with fees down 43%. Our ANZ consultant headcount decreased by 10% in the quarter and by 32% year-on-year, driving an increase in consultant productivity. Encouragingly, this has driven an improvement in ANZ conversion rate in Q4, and we enter FY 2025 with improving profitability. In our Rest of World division, comprising 28 countries, fees decreased by 11%. Perm, 59% of Rest of World fees, decreased by 16%, with temp down 1%. Germany decreased by 10%. France was down 13%, with June particularly impacted by the election. Poland and Switzerland decreased by 16% and 14% respectively. Portugal, the UAE, and Italy performed significantly stronger, up 12%, 3%, and 2% respectively.
The Americas decreased by 11%, although conditions were stable through the quarter, and our actions to improve productivity and manage costs drove a return to profitability in North America through H2. Canada and the USA fees decreased by 14% and 7% respectively, with LatAm down 19%. Asia declined by 13% with mixed but overall stable conditions. Mainland China increased by 8% and was consistently profitable, although Hong Kong was tough and down 30%, and Japan was also more difficult, down 13%. Rest of World productivity increased, with consultant headcount down 6% in the quarter and 20% year-on-year. Moving on to current trading and guidance, and I'd like to highlight the following points. Overall, we expect near-term market conditions will remain challenging. Activity levels are sequentially stable in ANZ, the Americas, and Asia.
In the U.K. and Ireland and France, we expect the recent activity slowdown will lead to a subdued summer trading, and it is too early to determine when we will see a meaningful recovery. In Germany, we expect lower temp starter numbers will further reduce volumes by 2%-3% in Q1 2025. That said, the impact of lower temp and contractor hours that we experienced in H2 2024 has started to ease, and we expect sequentially less fee and profit impact going into Q1 2025. Given our focus on driving consultant productivity in recent quarters, we believe our current capacity is appropriate for today's market conditions. We therefore expect overall group consultant headcount will remain broadly stable in Q1 2025. As I mentioned, our June fee exit rate was below the Q4 average.
Supported by our significant cost reduction actions, we expect to deliver GBP 45 million profit in H2 2024. It is difficult to predict the shape of FY 2025, given we only have four to five weeks forward visibility, but based on what we currently know, unless we see a material recovery in end markets, I think it is likely that profits in H1 2025 will be sequentially lower than H2 2024. Overall, while it is difficult to predict timing, we know our markets will recover, and when they do, we'll be firmly focused on delivering a high drop through fee growth into profit growth. I'll now hand you back to the administrator, and we're happy to take your questions.
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question. Coming from the line of Rémi Grenu from Morgan Stanley. Please go ahead.
Yes. Good morning, and thanks for the call. A few questions on my side. So the first one is on the Exceptional Cost that you are guiding for the second half of this year. It's slightly larger than anticipated. So can you maybe give a little bit more flavor on the actions that you've taken there and which relates to the delta of Exceptional Cost versus what you were expecting initially? On the offices that you've closed, can you just tell us where are these located and if these are focused on any specific specialism and if it means that you're exiting any specific verticals in some countries? And then just a third question on the headcount, which is expected to be stable in the first quarter of 2025.
Given the environment, the muted outlook, and the fact that you expect the summer might be difficult, aren't you tempted to try to further reduce that headcount and streamline a little bit the cost base further? Just want to have your view on, yeah, what's the balance that you need to strike between headcount reduction, the short-term impact, and where you think that, yeah, you can't really go further in terms of headcount cut before hurting the business. Thanks.
Thanks, Rémi. I'll pick those up in order. So I'll kick off with the question on our exceptional cost. So you're correct that it is higher than what we previously guided. If you think back to H1, we did GBP 12.7 million of effectively cash exceptionals rather than the non-cash element. And we expect in the second half that to be higher between GBP 25 million and GBP 30 million. Now, why is that? Well, to be honest, we have done more on the cost reduction program than we had previously set out, and you can see that in the increase of our annual cost savings from, we previously said, GBP 50 million, of which GBP 20 million was structural. We're now at GBP 60 million, of which GBP 30 million is structural.
Put simply, we have actually got on and got a few more things done in this half than we previously expected, and therefore we have got a higher exceptional charge in H2, but we also have a higher level of cost save to go with it, which I think is better position the business going forward. It kind of leads on slightly to the third question that you asked around headcount and why we think going into Q1 we're at the right level for the current market we're in today. If you stand back from where we are, Rémi, overall, our group headcount is down 22% from where we were at peak, which is pretty substantial and is also important to get the right delicate balance of making sure that we don't go too far in that.
I think we've done a pretty decent job of managing our capacity for the market that we're in today. That's appropriate for where we are today. We feel there may be one or two areas that we look to trim a little bit further. There may be one or two areas, actually, that we would put headcount back in in a very selective and modest way. So clearly, if the world changes materially, we reserve the right to review that. And again, we would be looking to get that balance right. But I think from where we stand today, there may be some selective reductions and, modestly, in some places, but overall, on balance, I think the majority of our markets are in the right sort of space. The second question was specifically around office closures. And again, that partially ties back into the exceptional question as well.
So we did close or merged 12 offices in the second half. There was a combination of moves, actually, Rémi. A good example is here in London where we merged our two biggest offices together into our Cheapside office, and we've moved out of our office in Ebury, which was, that's a big cost save for us, best part of GBP 1 million a year, is a good example. We've also looked at some of our smaller offices around the business as well. Do we need to be in each and every single one of those if they're not where we think they're strategically important? There has been an opportunity to modestly downsize that, and I think that's important. The rigor that we've put into the business, and I think the business has responded well.
There may be one or two others going forward, but I'm quite happy with some of the actions that the business has taken on that, and I think it's all part of the focus of rigor in the business and right-sizing the capacity. It's not as if we've closed specific specialisms. It's really just pulling out of strategically some of the offices that we felt that we didn't need to be in.
Great. Thanks for the call. Thanks.
Thanks, Rémi.
Thank you. We will now take the next question from the line of Rory McKenzie from UBS. Please go ahead.
Good morning. It's Rory from UBS, three please. Firstly, on the net fee decline in June, can you describe when and how you saw signs of that coming through? Was it a sudden change in trends from clients or candidates? And also, is there anything in particular you'd want to call out around the impacts of election cycles and deferred decisions, or is it too soon to talk about any rebound? Then secondly, can you say more about the dynamics in Germany? Interesting that you think the pressure on hours per contractor is perhaps lifting, but then you're, of course, just seeing steeper volume declines elsewhere. What do you think clients are trying to do there to manage their budgets? And is there anything, I guess, structural changing in use of contractors? I guess I'm wondering if in a normal market, will that hours per contractor fully recover?
And then finally, thanks for the comments on the kind of exit rate and profitability. Can you just talk through the periodic cost base and what seasonal factors to be aware of into the start of next year? Thank you.
Okay. Thanks. Thanks, Rory. I'll go back to the first question, which was on June. What did we see in June? As I mentioned on the call, our fee decline was 18% down in June. If we look at that exit rate, the biggest actual factor was actually on the perm side rather than temp. If I broke that exit rate out into temp and perm, our temp was down 15% in June, and our perm was down 23%. It was predominantly a perm deceleration in that month. Specifically, as we mentioned in the statement, we saw a weakening in the UK and in parts of Europe and principally in France. They were the ones that I would highlight as being lower than where we were through the rest of the quarter.
And I think there is a clear correlation with the ongoing political environment in those two countries. I think your question as to around how that plays out and do we see a recovery, I think it's fair to say with the activity through June, and activity, I mean forward activity in terms of number of jobs coming through, the interviews that we put on those jobs over the last six weeks, I think it's fair to say we'll have quite a subdued summer in those markets. The other one that I would highlight is Germany, and Germany had a similar deceleration in perm through the quarter. Whether that's politically driven or more economically driven, I probably would clearly more economically, but we did exit Germany down 23% in perm in June. So clearly, that was worse than the quarter overall.
I think actually in Australia, we had a pretty stable quarter overall. As I said, it was sequentially stable. Similar in the U.S., I think that was pretty stable. Both of those businesses, we've worked hard on productivity and actually saw improved profit performances through the quarter. So I think some of the actions we've taken around self-help have actually started to move the profitability of those businesses forward. So it's a difficult landscape to predict, but I do think that the perm markets are that bit tougher today than where we were when I had this call three months ago, and I think that's reflected in the exit rate. Regarding Germany and the dynamics we've seen there, it's been quite an interesting and difficult picture to try and unpick over the last six months.
On the last call, we spoke about the impact of hours, which we clearly saw in Q3, and that has continued into Q4. I think the peak of that impact was in the February, March, April timescale, and we certainly saw quite a dramatic impact around the Easter timing. So what we did see as we exited this quarter was a modestly lower impact of hours headwind in Germany, and we were actually at -6% in June versus -10% overall. As I say, we saw more of an impact earlier in the quarter and slightly less of an impact towards the end. But we've got kind of conflicting forces there because we're seeing a slight less of a headwind on hours, but we are seeing lower starter numbers, particularly in our temp business, and particularly within our temp business in the automotive sector.
That's a material part of our temp business, and we've seen about a 40% reduction in new job flow coming in from the automotive sector in the last six to eight weeks. And I do think that that will create a headwind going into the next quarter, and therefore I expect the year-on-year volumes to move from -6% in the quarter in Germany. They're actually -7% on exit rate, and I think we'll probably be down -8%, -9% also in the next quarter as a result. So where that all lands is quite difficult to tell, but overall, our exit rate in Germany was -13% in temp and contracting. It was -23% in perm and then -15% overall. And I think directionally, that's probably the right sort of direction for where we go into the next quarter.
The last one was just our periodic cost base. And I think if we stand back from where we were in Q1, cost base per period was around GBP 87 million. And as we exited the year, our cost base per period was around GBP 81 million, and that's a GBP 6 million reduction. About GBP 1 million of that is commission savings, and the rest of it is the actions we've taken to reduce our headcount through the year and also other cost save initiatives, things like properties that I've talked about previously. That's what together equates to the GBP 60 million annualized, and that's what drove the exceptional costs in H1 and H2 as well. That GBP 81 million, clearly, we have a bit of a reload on salary reviews.
So I think starting the new financial year, I'd expect that to be sort of around GBP 81.5 million-GBP 82 million as we start the new financial year. But importantly, that's still materially lower than where we were starting this financial year, and I think that's important. It's important that we keep that under close review. I think I've clearly given quite clear headcount guidance on where we expect overall Q1 to be, not materially different than where we are today. And therefore, I suspect that will be a relatively, hopefully, stable cost base going into Q1.
That's all very helpful. Thank you.
Thanks, Rory.
Thank you. We will now take the next question from the line of Allen Wells from Jefferies. Please go ahead.
Hey, good morning, gentlemen. Three for me, please. Maybe just start Australia. It looks like peak to trough net fees are down about 30%. Headcount looks similar. So maybe just could you just comment if the conversion rate has now bottomed and will the second half look better than the first half? And maybe just more broadly, are we starting to see some stabilization in net fees now, which I guess is sort of indicated by some of the job ads data coming through? That's kind of the first question. Then secondly, just on kind of the time to hire extending, I think you talked about the number of interviews required to place perm candidates went from six to 7.5, given what we saw from Page earlier in the week. Maybe just comment if that's increased further.
Then finally, just on perimeter change, which you've talked a little bit about, maybe can you just give an update on the action taken on business units that can't deliver that desired conversion rate over the medium term? So where are we on that? Thank you.
Great. Thanks, Allen. I'll start with the question on ANZ. And you're right. We are peak to trough down about 30% on fees, and we've worked pretty hard to closely align that with our reduction in capacity as well. And peak to trough, we're down 33% on consultant headcount. So we've worked pretty hard to keep that in line. I do think we are now at a position where actually we could do with 1% or 2% more, actually, and we are selectively investing. But we're also doing it in a very surgical way and making sure that the people we do bring in are the right people, and we're not just bringing a headcount number in. So I think that's a really important discipline, and I think the guys have got on and done a really good job there.
The downside of that is our second half profitability won't be better than our first half profitability or conversion rate. But what we do have is an exit conversion rate in Q4, which is better than Q3. It's not as high as Q1 because clearly we've been reducing cost against a top line that's come off more. But I am pleased that we are exiting the year with an improving conversion rate month-on-month, and that's important. And if I put that against the job market, if you look at the SEEK data that came out this week as a good example, it was down 1.5% on the previous month. It's down high 20% versus prior year. And I think it's fair to say the majority of our competitors are finding it a pretty challenging market in Australia.
Certainly on the perm side of things, it's still a really subdued market. We are seeing, I think, early stages of an improvement in our temp business, and certainly pockets of our temp business, such as tech, are actually starting to move forward in Australia. The broader economy is still a difficult one, and I think we've done the right thing there to really tackle the productivity and bring that in line. I think, as I say, I think we're happy with where we are now, and I'd like to see that probably increase modestly going forward. Your question on time to hire data and whether that's changing and whether that's changed through the quarter is a difficult one to unpack. We certainly continue to see pretty resilient levels of new jobs coming in.
So if I look at the job flow data in June versus where we were in April, it's ever so slightly down, but not materially so. I think there's pockets where it is down a little bit, but we have seen it become more challenging to convert those jobs, and we are putting more interviews on the job on average. I know I've spoken before of 7.5 interviews on the job versus six. Whether that's sneaked up to eight or not in the last month, I don't really have the view on that in one month in isolation, and also the trends are different by country. But there is certainly an elongation in the process. Difficult decision-making, both in the public sector and in the private sector, has been an impact on us as well.
I think that's normal in a world where people were looking for a bit of certainty. I think so there is lots going on. Our teams are busy. There's lots of activity going on. It's just getting things over the line is challenging. That's on the temp and contracting side as well as perm. I think it also feeds into the candidate decision, and candidates are more nervous and uncertain than they were three or six months ago. I think that, again, feeds into the decision-making from them, and that, again, feeds into the process and on average makes it more difficult to fill a role. Regarding business unit closures, Dirk and I set out at the prelims our view on making sure that all of our businesses had the ability or the potential to deliver a good conversion rate.
We have had some selective closures of the business over the last six months, not material ones, and certainly we haven't gone and shut five countries or anything like that. I think what we've been is quite surgical and quite selective around some of the business units. So good examples, we closed our education and healthcare businesses in Australia. We've largely downsized our healthcare and social care business in the U.K.. Two good examples, we closed our temp business in Italy. We closed our retail temp business in Germany. So there's half a dozen examples where we felt that we didn't have critical mass. We didn't have the strength and depth that we needed, and we weren't performing at the level of productivity that we felt was sustainable to make the level of return.
So we'd rather reallocate our people and assets and focus on the businesses that we know can make us the level of return. So it's relatively tactical, and it's in quite a lot of detail. Hopefully, Allen, that's given you a feel for kind of what we've been doing.
No, it's really helpful. Thank you.
Cheers.
Thank you. We will now take the next question from the line of Andy Grobler from BNP Paribas Exane. Please go ahead.
Hi, good morning. Just three from me as well, if I may. Firstly, just in the U.K., we've had a change of government. Any indication as yet that there may be also a change in their approach to the usage of temporary workers within the public sector in the UK? Secondly, on cash flow, year-end cash, a bit lighter than I had expected. Could you talk through any kind of incremental moving parts that we may have seen in that? And also what that means for special dividends, either this year or next year? And then thirdly, you talked about productivity improving through the year. I kind of just wonder how you balance productivity in terms of gross profit per head going up, but EBIT per head having fallen so sharply, down by almost two-thirds over the past four or five years.
How you balance those two things out and whether, as you look at that equation, whether you think about doing something a bit more radical to get that profitability per head back up to where it once was? Thanks very much.
Thanks, Andy. I'll kick off then with the U.K. and change of government and whether that means a different approach and impact on the public sector. I genuinely think that's too early for us to make a call on. We certainly have seen more slower decision-making in the public sector in the last three months, not dissimilar to what we've seen in the private sector. I think it will take a little while for the dust to settle and then get some clarity around what is the approach and whether that makes a material difference in their hiring decisions and how they want to come out to the market. I think it really is too early for us to say whether that will materially change or not.
I know clearly the Labour government has a number of things on its agenda, but we'll have to see over time how that plays out. On balance sheet, GBP 55 million was actually in line with where we expected to be. Andy, we were a bit lighter at the end of Q3, as you were aware, and we talked about three months ago, and actually we had a pretty decent cash performance. GBP 75 million increase in cash through the quarter was in line with where we expected it to be. I think though there are a couple of things I would flag within that. Our DSOs, as I talked about, at the half year were up on prior year, and we've seen that nudge up another day in the second half. And why is that?
I think an important part of the mix is the portfolio of business that we have at the moment is a little bit different than where we were 12, 24 months ago. Our enterprise business, as a good example, was flat in the quarter versus a business overall that was down 15%. And clearly a mixed shift there is good. It's resilient and it helps the top line, but clearly with it comes generally higher DSO terms. So if I look at the structural debt ledgers that I have today, it's actually better aging than I have this time last year. But when you have more of your debt ledger on higher DSOs, it becomes harder to manage. And that's why I think overall we've not seen the level of working capital inflow.
We've seen a modest working capital inflow this year, but it's not been at the level that we would have done if we'd have kept DSOs level year-on-year. I think that is a bit of a headwind on cash. How that plays out over the next two or three years is difficult to call because I would expect a recovery at some point in the SME client base. And then again, that will structurally reduce DSOs, and we'd have an opportunity to benefit from that. How that plays into year-end and specials and return of capital, we've been hopefully fairly consistent and clear on our policy for distributions back to shareholders of specials or surplus cash through specials or buybacks of anything over GBP 100 million on the balance sheet at year-end. Clearly at GBP 55 million, we're not at that level.
So we won't be proposing a special or a buyback this year. And how does that play out going forward? Well, in a world where we're making around GBP 100 million of profit, we can pay our tax, we can do the CapEx we need, we can service the pension surplus, but we don't generate significant surplus cash flow. So would that balance materially change going forward at that level of profitability? Not really. So we do need to be getting back into higher levels of profitability in order to rebuild that cash position back north of GBP 100 million, which clearly is what we want and hope to do. But I think with where we are right now, it feels like a little way away. So hopefully as that profit rebuilds, it gives us the opportunity to rebuild that cash position. Final question was around productivity improvement.
Clearly we continue to focus on that, but the profit per consultant is a sum of two different equations. The first one being the productivity per consultant and making sure that we can drive that. I would highlight that we are in a market today where our volume productivity is probably 15% lower than where we would be at peak. It goes back to the question earlier around we're doing 7.5 interviews on a job, not six. That makes it harder to get transactions over the line and ultimately reduces the level of profitability that our consultants can generate. Clearly there is some latent capacity in the business that we would expect to recover when we're in a more normal market, and this is a tougher market than normal.
The second side of the equation is how do we then manage our fixed cost base and overhead cost base in order to leverage as much of that to drop through to the bottom line? And we've been working pretty hard on that over the last nine to 12 months. We have a number of projects that have completed in the year, and that's placed part of the GBP 60 million annualized cost savings. We also have some quite material projects currently in flight, which we will be working on over the next 18-24 months. And I do think we'll make a material difference to the structural cost base of the business. And I think we will continue to work on that in lockstep with working on the productivity of the business.
I think you put those two together, Andy, and hopefully we have the opportunity to drive that EBIT per head up over a period of time.
Okay. Thank you.
Thanks.
Thank you. As a reminder, if you wish to ask a question, please press star one, one on your telephone. That's star one and one. We will now take the next question from the line of Karl Green from RBC. Please go ahead.
Yeah, thanks. Good morning, James. Just a couple of residual questions from me. Firstly, on Germany, which you've given some helpful color on already, particularly around the drop in demand for temps in the automotive space. I'm just looking at your two biggest specialisms there, technology and engineering, just to try and get a sense as to where residual risks remain within those sectors, just in terms of any kind of anecdotal evidence you're seeing of a drop or an increase in demand, say, for digitalization solutions, etc. Just trying to think about which sectors are actually also end markets, rather, actually holding up for you, but that potentially could change. That's the first question. And then the second one, again, you've given some very useful color around the conversion ratio outlook for ANZ in the short term.
Just looking at those structural cost savings of GBP 30 million, which regions are likely to benefit from that the most? So one would assume the U.K. is going to get a benefit from some of the property consolidation you've talked about. But just how should we think about the sort of major regional beneficiaries of those initiatives, please?
Yeah, great. Thanks, Karl. So just on Germany first, and really what are we seeing in our end markets that will have an impact on those going forward? I think probably the biggest one I would call out would be the automotive sector, as I mentioned before. And that is our temp business leans into the automotive sector. And we've clearly seen weakness there over the last few, well, two or three months, actually, and gradual fall in demand. And currently, as we stand in today, we're seeing about a 40% lower level of new placements going into the automotive sector. That makes up about 25%-30% of our temp business. Contracting tends to be not into the automotive, but of our temp business in Germany, about 25%-30% of that business is focused on the automotive.
That is a challenging place to be right now, and will be a headwind going into the next quarter. Where have we seen more resilient end markets in Germany? We've seen actually pretty good public sector end markets. It was down a little bit year-on-year, but it's been overall more resilient. We've had quite a resilient and pretty decent performance into the utility sector, and also in construction and property was flat year-on-year, which has been a pretty decent performance as well. Actually, though, when you put all that together into the mix, and this was part of the hours conundrum that we were trying to work through, is that certainly the hours headwind we've seen has been driven by lower client demand, specifically in the enterprise client base.
But we have also seen a bit of a mixed shift between the business that we currently have, perhaps where we were six or nine months ago, and public sector generally has slightly lower working hours. Construction and property and the utilities are slightly lower working hours than what we would typically see in financial services, for example, or in perhaps some of the tech areas where we've seen slightly less placements. So there's certainly been a mixed shift in the portfolio that has contributed to that. Hopefully, Carl, that's given you a bit of a feel for where we're seeing more resilience versus where we're seeing a little bit more weakness in Germany. On the cost savings, actually, it's relatively broad-based in terms of where have we taken the actions on costs.
I think all of our regions, you can see that from the levels of consultant headcount reduction in the business, have actually played their part in all that. There's been a little bit more of a catch-up this half in Germany and Europe from where we were half year. Clearly, that's been more of a focus in this second half. In the first half of the year, we had a number of projects in flight in the US and in ANZ as well. I think they were the largest one. Then I think the U.K. has been throughout the year, actually, and has been kind of pretty consistent over the last 12 months. All of our businesses have played their part in that. I wouldn't say that it's all concentrated in one area at the expense of another.
Hopefully that's given you a feel for those where those structural cost savings are, Karl. I'd say they're relatively broadly based.
That's very helpful. Thanks very much.
Thank you.
Thank you. Are there any further questions? I will now hand you back to James Hilton for closing remarks.
Thanks. If that's all questions for today, I'd like to say thanks again for joining the call. I look forward to speaking to you again at our full year results on the 22nd of August. As always, if anyone has any follow-up questions, David, Rob, and myself will be available for the rest of the day to take any calls. Thank you. Bye-bye.
This concludes today's conference call. Thank you for participating. You may now disconnect.