Global recruitment chain Hays has announced plunging profits as it said uncertainty about the economic and political environment was weighing on hiring activity.

The company, which is one of Europe’s biggest recruitment agencies, said conditions in the jobs market remained “challenging”.

Its net fees were £972.4 million for the year to the end of June, 11% lower than the previous year when compared like for like.

This was largely driven by a sharp 17% drop in permanent hiring fees, with the volume of placements down by a fifth.

This was weaker than the 7% decline for its temporary and contracting division, which it said was slightly more resilient.

Pre-tax profits shrank by 90% year-on-year to £1.5 million.

Its profit before exceptional items, which it deems to be one-off costs, tumbled by two thirds to £32.2 million.

Hays previously warned investors that its annual profits were likely to fall short of expectations because of a lacklustre global jobs market and hiring weaknesses in Germany, its biggest market.

German carmakers have faced particularly subdued activity amid the threat of higher US tariffs looming over the industry.

Permanent hiring volumes dropped by a quarter across the region, with weak confidence weighing on employers and job seekers, Hays said.

Hays has been making sweeping cutbacks in a bid to help mitigate the impact of the hiring slowdown.

It said it had made £35 million worth of annual cost savings and it was targeting a further £45 million by 2029, which would bring the total to £80 million.

As part of this, it has closed or merged 29 of its global offices in the past year, and cut the number of recruitment consultants it employs by 14%.

This amounted to nearly 1,000 job reductions worldwide, including about 350 in the UK and Ireland.

Hays said activity in July and August had not picked up and it was too early to say how September, a key trading month for the recruiter, would fare.

Dirk Hahn, Hays chief executive, said: “Market conditions remained challenging during the year, with economic and political uncertainty weighing on confidence, increasing ‘time-to-hire’ and reducing placement volumes.

“Despite making significant strategic and operational progress towards our long-term ambitions, our overall financial performance was impacted by these headwinds.

“Our strategy, targeting the most in-demand sectors, roles and geographies, building stronger client relationships and increasing exposure to temp and contracting recruitment, continues to develop.”

Mr Hahn said the firm was in a position to grow its fees and profits “when key markets recover”.