Good day and thank you for standing by. Welcome to the trading update for the quarter ending 30 September 2026. 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 and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and 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, Kean Marden, Head of Investor Relations and M&A. Please go ahead.
Good morning everyone, and thank you for joining us today. I'm Kean Marden, Head of Investor Relations, and I'm joined here today by James Hilton, Chief Financial Officer, to present Hays' Q1 2027 results. Before we begin, please be aware that this call is being recorded and the replay is accessible using the number and code provided in the release. 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'll now hand you over to James.
Thank you, Kean. 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, our like-for-like results exclude country exits and the disposals of our operations in six European countries that we previously communicated in June. Moving on to Q1 trading. With all net fee growth percentages on a like-for-like basis versus prior year, unless stated otherwise. Group net fees decreased by 3%, with Temp & Contracting improving to down 1% and perm down 7%. I would highlight the following key items from the results. Temp & Contracting net fees decreased by 1% as volumes remained sequentially stable, and the decline in average hours worked in Germany was in line with our expectations and stable during the quarter.
The year-on-year decline in group Temp & Contracting volumes eased to 3%, including Germany down 2%, U.K.&I down 7%, ANZ down 9%, and rest of the world up 5%. Perm net fees decreased by 7%, driven by a 12% decline in volumes as markets remain mixed but stable overall. The volume decline was partially offset by a 5% increase in the group average perm fee, supported by our actions to target high salary roles. We continue to target high-paid roles for candidates, invest in the best tools for our consultants, and forensically allocate consultants to business lines with the most attractive productivity and long-term structural growth opportunity. These actions delivered 8% growth in average consultant net fee productivity, including notable increases in Germany and the U.K.&I, up 11% and 10% respectively.
Excluding the impact of country disposals and exits, group consultant headcount decreased by 1% sequentially in the quarter and by 9% year-on-year. We have made good progress with our initiatives to deliver further structural cost savings of GBP 50 million per annum in FY 2027, achieving GBP 10 million in Q1. In total, we have now delivered GBP 125 million per annum of structural savings since the start of FY 2024. The group's net debt position was circa GBP 45 million, which is in line with our expectations and reflects normal seasonal cash flows, cash exceptional payments, and share purchases related to our non-dilutive all colleague share award. I will now comment on the performance by each division in more detail. Our largest market of Germany saw fees down 6% year-on-year.
Temp & Contracting fees decreased by 5%, with volumes down 2% and a further 3% impact from negative hours and mix.
Contracting volumes increased modestly year-on-year, aided by fewer terminations and average hours worked remained stable through the quarter. Temp volumes were sequentially stable. Perm remained challenging but sequentially stable through the quarter, with the year-on-year decline in net fees easing to 8%. In our two largest specialisms, net fee growth in technology accelerated to 3%, but engineering, our second largest, was down 23%. Finance was down 9%. Construction & Property performed strongly again and increased by 28%, driven by our focus on infrastructure and the energy sector. Construction & Property now contributes 10% of our net fees in Germany. Consultant headcount decreased by 2% in the quarter and by 16% year-on-year. Consultant net fee productivity increased by 11%, driven by our ongoing focus on resource allocation, and we made good progress with our structural cost-saving initiatives. In U.K.&I, fees decreased by 5%.
Temp & Contracting declined by 3%, but perm remained subdued, down 9%. Fees in the private sector declined by 6%, with the public sector down 3%. At the specialism level, finance and Construction & Property increased by 2% and 1% respectively, while technology decreased by 2%. Office support was down 1% as our actions to target high salary roles continue to broadly offset lower volumes in junior roles. Consultant headcount decreased by 4% in the quarter and by 13% year-on-year. Consultant net fee productivity increased by 10% year-on-year, and we made further progress in improving our operational efficiency and cost structure. Once again, a key driver of productivity has been greater focus from our consultants on high-skill roles. As a result, year-on-year growth in average candidate salary accelerated to 9% in perm and 8% in Temp & Contracting.
In ANZ, fees decreased by 3% year-on-year, with Temp & Contracting down 2%, but perm remained slightly more challenging and was down 6%. The private sector grew by 3%, but the public sector was again softer, down 14%. At the specialism level, growth in Construction & Property, our largest at 26% of Australia and New Zealand fees, accelerated to 5%, and Resources & Mining grew by 10%. Technology and F inance were down 4% and 2% respectively. Australia fees were down 3% year-on-year, and New Zealand eased down 5%. ANZ consultant headcount was up 1% through the quarter, but decreased by 4% year-on-year. Consultant net fee productivity increased by 3% to a nine-year high, driven by focus on resource allocation. As with the U.K. & Ireland, a key driver of our profit recovery has been greater focus from our consultants on high-skilled roles.
As a result, year-on-year growth in our average salary of our perm placements accelerated to 10%. In addition, we continue to make good progress with our cost actions. Our Rest of the World division currently comprises 18 countries, and as a reminder, our total actual growth rate includes the impact from our previously communicated exits from Thailand and Mexico and the disposal of six European countries in June. Like-for-like net fees were flat year-on-year. Temp & Contracting delivered positive year-on-year growth for the third consecutive quarter and accelerated to 8%. Perm declined by 7%. In EMEA ex-Germany, net fees decreased by 5%. France, our largest Rest of the World country, remained challenging, with fees down 16% as weakness in perm offset growth in Temp & Contracting. Portugal, up 42%, achieved record quarterly net fees, and Spain performed strongly again, up 15% with a record Q1. Poland grew by 5%.
In Americas, net fees increased by 9%, driven by strong growth in Construction & Property, a mobilization of recent solution contract wins, and strong consultant net fee productivity. The U.S. and Canada grew by 8% and 12% respectively, and we expect contract wins to contribute further to net fees over the coming quarters. Asia net fees increased by 6%. Japan grew by 2%, driven by strong growth in our Temp & Contracting business despite public holiday headwinds over the summer, while Greater China grew by 27% with improved activity in perm. For Rest of the World as a whole, consultant headcount increased by 1% in the quarter but was down 3% year-on-year. Before moving to current trading, I would like to take a few moments to update you on our strong strategic and operational progress during the quarter.
Mark and I have visited our colleagues across all divisions over the last few months. There is real energy across Hays, and we are executing our momentum strategy at pace. As we have previously shared with you, our initiatives to improve consultant net fee productivity in real terms and structurally improve our cost base will be key drivers of profit recovery. So we were encouraged once again by our good progress in the quarter. Consultant fee productivity growth remained at 8% in Q1, has now increased for 12 consecutive quarters, and fee productivity has increased by 21% in aggregate over the last three years, and at an accelerating rate in recent quarters. Our programs to structurally reduce our cost base by GBP 50 million this year are progressing well.
Our people and digital initiatives will help us maintain this positive momentum and support our ambition to increase net fee productivity by more than 50% over the medium term. For example, we recently signed a strategic partnership with Synthesia to scale skills development, accelerate AI adoption, and examine consultant performance drivers. This AI platform is a key enabler of the Hays Academy and our digital initiatives. In addition, we commenced the phase go live of our proprietary OneTouch 26 CRM system across Europe following successful deployment in APAC, which will support our AI agent and Search & Match initiatives. Finally, we are making good progress exploring strategic options relating to our businesses in Belgium, Brazil, Greater China, Malaysia, the Netherlands, Singapore, and UAE. I am pleased to share that we are in advanced discussions for several of these processes.
As a reminder, in every market we compete in, our ambition remains clear: to grow, achieve leadership, and deliver the benefits that come with it, including faster matching, greater exposure to high-value roles, stronger margins, and better outcomes for clients and candidates. Where we can't, we'll step back and reallocate investments to generate superior returns elsewhere. Moving on to current trading. Our September net fee growth rate was -2%, and we expect stable market conditions in the near term with greater resilience in Temp & Contracting than in perm. 50% of Hays is now delivering positive year-on-year net fee growth, an encouraging improvement from 30% in the previous quarter.
We continue to relentlessly focus on our structural cost and productivity initiatives, supported by investments in our digital platforms as we create the talent workspace of the future and our colleagues, as we seek to achieve our medium-term targets through our own actions. There are no material working day impacts expected in Q2 2027, and the sharp-eyed among you may have noticed that we have not provided consultant headcount guidance for Q2. We will continue to carefully invest in headcount in the most attractive business lines and reallocate from elsewhere, so the net impact is difficult to predict from quarter to quarter. Moreover, in the medium term, our path to more than GBP 1 billion net fees will be driven more by productivity growth than increased consultant headcount. I will now hand you back to the administrator, and we are happy to take your questions.
To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. We are now going to take our first question. Just one moment. And this question comes from the line of Tom Burlton from BNP Paribas. Please go ahead.
Hi, guys. Yeah, thanks for taking my questions. Just two for me, please. First one, could you talk through the trends in Germany in a bit more detail based on perm, temp, and contracting? And I guess in particular, are you seeing any tailwinds from fiscal spending there? And then the second one on France, I think you touched on the situation. I think you described it as challenging. Just curious there in terms of progress, given political uncertainty in particular, and what you're seeing in that regard, please.
Sure. Thanks, Tom. I will kick off with the question on Germany and the trends we are seeing. Yeah, interesting that this was the first quarter where we saw year-on-year volume growth in our contracting business. Our contracting business, as you know, is our biggest business there. We have seen good numbers of new starters. The number of placements we have made over the last three months has been in line with our expectations, and we continue to see slightly fewer finishers and terminations of assignments. That overall put together has put us back into volume growth in contracting for the first time in a while. We do still continue to see a headwind from working hours in Germany in contracting, but it is stable over the last six months and has not gotten any worse.
When you put that together with the mix of slightly higher margin and higher value placements, it is about a 3% drag on fees. But it is good to see that the business is back in volume growth. Temp, as you know, is where we have the exposure to the automotive sector, is still heavily down, and you can see that in the numbers this quarter again. Really, we are seeing pretty flat trends in Temp volumes. We are down about 20% in Temp year-on-year in volume, but it is pretty stable. It is a stable trend. If I put our Temp volumes compared to where we were six months ago, it is pretty stable, and we are not seeing any real deviation in that. Then in Perm, it is like elsewhere in Northern Europe. It is pretty challenging and quite bumpy.
So good month, weaker month, followed by a better month again.
It is a bit inconsistent, but around a stable trend. Again, if I put the Perm fees in Germany in September versus where we were in March, it is consistent. It is not getting any worse, but it is not getting materially better either. As I say, there is a level of variability from month to month. Over in France, again, it is a tough Perm market there, particularly in the junior end of the market. But actually, we are seeing some positive signs in our Temp & Contracting business, for example, where we are up 15% year-on-year. That is performing pretty well. But we are seeing 75% of our business in France is in the Perm market, and particularly the lower end of the Perm market is really challenging.
We have historically had a bigger business in office support in the banking market, and that is again, still a pretty tough market.
But there are some signs of life in some of the more technical areas, such as Construction & Property and technology, where things are a little bit better. Again, Northern Europe in Perm is still pretty inconsistent. In France, we had a pretty decent September, but we had a tough July and August. Part of that is holiday season there and is to be expected. But it is quite, again, variable month to month.
Very clear. Thank you.
Thanks.
Thank you. We are now going to take our next question, and this one comes from the line of Rory McKenzie from UBS. Please go ahead.
Morning all, it's Rory here. Just three questions, please. Firstly, good to see there's more areas of the group moving into positive year-over-year growth. Can you describe a bit more what's happening within the Americas and Asia in particular? Secondly, at a group level, you say that within the net fees there was a 4% increase in average salaries. How much of that do you think is from your own repositioning compared to just kind of market level in inflation? Can you just talk about where that's strongest or weakest across the group? Then just finally, on the cost savings, good progress towards that 50 million target. Anything to call out in terms of phasing of those cost savings or the benefits to land within this year? Thank you.
Okay, great. I'll kick off with the areas in growth, and obviously Rory highlighted the Americas and Asia. Actually, when I look at the Americas result, we're seeing, I think, two or three factors in there. First of all, we've got a decent sized business in Construction & Property, and the perm market there is particularly strong. So we're seeing growth of about 30%-40% in Construction & Property in the U.S. and in Canada. So that's a very buoyant market. We're seeing lots of demand across clients in the world, such as data centers, infrastructure investment, energy renewables. That's all pretty strong and underpinning that C&P growth that we're seeing there. The tech contracting business there, which is our biggest business, is doing pretty well, sort of mid-single digit growth there in contracting.
We are seeing an improvement in our solutions business with a couple of bigger wins coming on stream, which has brought that business back into growth. I think if we think back a year ago, we were talking about a lost RPO contract, which put that business backwards. It is quite encouraging to see a couple of good wins there in the solutions business, and we have a couple more in the pipeline. So that is moving forward quite nicely, so a decent quarter over there. In Asia, we are seeing quite a mixed picture as, again, the Greater China market, as you can see, is for us pretty much all a perm market, and that was pretty strong. We are seeing better performance in financial services and banking. Actually quite broad, life sciences was very strong there. We have a good sized life sciences business in China.
In Hong Kong particularly, that is quite a lot of financial services and banking market. Japan has been a real good performer for us over the last couple of years. Really strong growth in Temp & Contracting, so particularly in the technology contracting business, really going forward well there. I think we are up about 60% in the quarter in Temp & Contracting. On the contrast of that, perm has been quite disrupted this quarter in Japan, particularly in late August into September. We have had a combination of silver week there, and the normal holiday season that we have has been quite extended. So our perm business was actually slightly down year-on-year in Japan for the first time in a while. Actually, the underlying activity is pretty good. It is just a lot of disruption on start dates and getting placements over the line.
We are still pretty confident that we will have a good second quarter in Japan. I think that 2% will hopefully move further forward. Second question was around the placement value, wasn't it? 4% average placement salary versus, I guess, underlying wage inflation and where is that taking us? It is probably 2%-3%, so I think we are probably a percentage point or two ahead of that. So you can see in areas such as the U.K. and Australia, we have really focused perhaps some of the areas of the business where historically we have had more business in the lower end of the market. Perhaps on the other hand, Germany, where we have always had a higher value business, probably less of a tailwind there.
Certainly in the U.K. and Australia, we have really got the focus on bringing ourselves further up salary ranges, and that has started to really help productivity in those businesses, which is moving forward well. So yeah, pretty pleased on that. It is across both temp and in perm as well, Rory. So it is good to see it coming through both for us, which is good. Then on the cost savings, we did about GBP 10 million or so in the first quarter. Obviously you have got summer right at the start of the year, so it is difficult to get going right at the beginning of the year. But no, we have made good progress.
We gave the target for GBP 50 million for the full year, so we are in line with where we expected to be at this stage and making good progress to where we want to be at the half year.
In terms of overall phasing, I would like to think I would be at a good, sensible midpoint towards that target by the half year, and then you can think through the phasing H1 versus H2. We will talk more about it at Q2, I guess, and the interim results in February. But yeah, we have had a good start to the year, and we have got our plans up and running, so we expect to make good progress there.
Okay.
Did I cover everything, Rory? Apologies if I did not.
Yeah, that did it. No, no. All very helpful. Thank you.
Brilliant. Thanks.
Thank you. As a reminder to ask a question, you will need to press star one and one on your telephone. That is star one and one to ask a question.
Good.
There seems to be no further questions for today. I will now hand the call back to James Hilton for closing remarks.
Thank you. It added. Oh, we have got one.
Just one more question. Are you happy to take it?
Yeah, absolutely. No problem.
Perfect. Okay, just one more.
Thought I was off the hook early there.
We have this question from Steve Woolf from Deutsche Bank. Please go ahead.
Sorry, James, not quite so fast. My star one one ones weren't working. It was just a quick follow-up to
Rory's about really the cost being taken out. In a heady world where growth gets back to, say, 5%, 6%, do you think you can keep all of that structural costs out? Do you have a, again, we're getting ahead of ourselves, but do you have a sort of a conversion ratio in mind relative to history, given that all of that cost is taken out? My second question is really on Germany, where it's risks all the time that is now being flagged to me around the white-collar side at a time when we're seeing improvement from all of the recruiters in terms of their year-on-year performance. Just wondering whether you could sort of square that a little bit and where you'd see yourself being at risk were Germany to slow at this point in terms of recovery.
Okay, Steve, I'll kick off with the structural cost program. I think the reason why we've sort of made the separation between structural costs and perhaps more cyclical capacity costs
Yeah
is these are costs that we expect to save for the longer term. So, whether it's things like consolidation of some of the offices, some of the work we're doing in the mid and back offices, some of the spans and layers work, is savings that we see for the longer term. So if I put that together, on the other hand, obviously when we adjust our capacity through the consultants, obviously that at some point we expect to reinvest and bring cost back into the business. So in terms of the conversion rate, we set out some targets, as you know, at the prelims, and we see
an opportunity to take this business back to a 25% + conversion rate. I think some relatively simple maths, we were just over 5% last year. If we think about
Yeah
the structural savings we delivered last year, we still have GBP 30 million of that to come through in this financial year. Delivering the other GBP 50 million we've set out, that GBP 80 million is about a 10% improvement in our conversion rate. So we see a very clear path back to 15%, maybe slightly above, just through the programs that we've got up and running, and that's a structural improvement to the profitability of the business. Clearly then, the remaining improvement in conversion rate will come through driving consultant productivity over the medium term, and we've set out some pretty clear ambitions and some targets for ourselves on that front. Then clearly some element of that productivity growth will be reinvested. We've got ambitions and goals around our technology rollout, the investment in our people through the Hays Academy.
That's natural reinvestment that we'll want to put back into the business. But overall, we see the opportunity to get ourselves back to 25% or above.
Okay. Thanks.
The Germany question, I guess, and where are we seeing the improvement and the longer term outlook. I think what we've done a really good job of, Steve, is pivoting the business over the last three, four years. If we think back four years ago, we had 4,500 temps in our German business and about 2,000 temps into the automotive sector. If I look at that business today, we've got about 2,300 temps and about 600 temps in the auto sector. So we've had a lot of headwind to manage through that. But on the other hand, we've got a Construction & Property business, which is now 10% of net fees and is growing incredibly strongly. Why is that? It's because we've refocused the business on the opportunities in the energy sector, in the infrastructure sector, renewables, et cetera.
We are good at firing the guns at where the market opportunities are, and I expect that to continue. There is an element of tailwind there as well from the government infrastructure projects, and some of the investment and spend coming through there, and we're very well positioned to benefit from that over a period of time. The autos, as I say, we have about 600 temps now into the auto sector, so it's still a good size business for us, but it's not the exposure that we perhaps once had. We see pretty stable trends there. In fact, we're starting to take market share in the supply into the autos. But we see lots and lots of opportunity in Germany in the broader technology, in the broader engineering space.
As I say, Construction & Property we see as a big opportunity over the longer term for us. Life sciences, we have a big business, financial services, we have a big business. So we're really well-positioned there across all of those markets.
Perfect. More generally, you're in a low-ish GDP plus environment at the moment, more sort of globally. What do you think then it takes to grow the business at a decent rate from here? Is it a bit of confidence really that's held things back? Or do you need sort of GDP at 2% in most of the countries to see strong volume growth and confidence come back to boost these markets? Or is it more of a, look, these are a lot of self-help measures here internally that we have done, as you've said, with the pivots that can get higher growth out of low growth environments as it were. Is that fair?
Yeah, I think, Steve, I think we've tried to be pretty clear on how we position the momentum strategy, which is this is not about a material dramatic change in the world. We can't control the world's economies and GDP growth, et cetera. But we can control the markets that we want to operate in and play in.
Sure.
Our strategy is about focus and ultimately taking market share in those markets. I think provided we don't see material economic shocks, I think obviously if something comes along like the GFC or the COVID, then that's a different thing. But provided we don't, we see relatively benign backdrop, this is about taking market share. I think if we get significant GDP growth on top of that, great, it will help us. But our strategy and our ambitions are about the world that we're in today and how we take market share into markets we play in, which is why we've been much more focused and made decisions around which markets we don't want to be in as well.
Perfect. That's great. Many thanks, James.
Brilliant. Thanks, Steve.
Thank you. There are no further questions for today. I will now hand the call back to James Hilton for closing remarks.
Thank you. That is all for the questions. Thanks again for joining the call. I look forward to speaking to you next at our Q2 IMS on January 14. Should anyone have any follow-up questions, Kean, Prash, and I will be available to take calls for the rest of the day. Thank you.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.