Robert Walters FY profit seen flat as Brexit, trade worries dent performance
Recruiter Robert Walters posted a rise in overall third-quarter profit on Tuesday but a drop in UK profit amid Brexit uncertainty, as it warned that its full-year performance would be flat.
In the quarter to 30 September, group net fee income rose 4% to £105.6m, with gross profit in Asia Pacific and Europe up 9% and 10% to £44.8m and £26.9m, respectively. Other international saw profit grow 18% to £9.2m, but profit in the UK was down 11% at £24.8m.
The company took a hit from Brexit-related uncertainty, the trade spat between the US and China, protests in Hong Kong and the impact of the gilets jaunes protests in France, all of which mean that full-year pre-tax profit is now expected to be in line with the previous year.
Chief executive Robert Walters said: "Whilst visibility is limited, the group's international footprint and diverse blend of revenue streams covering permanent, contract, interim and recruitment process outsourcing ensures we are well positioned to respond to any market opportunities as and when they arise whilst also having the agility to closely manage our cost base."
Also on Tuesday, FTSE 250 recruiter PageGroup warned over its annual profits, citing slow German growth, Brexit, the Sino-US trade war and the Hong Kong protests.
At 0910 BST, Robert Walters shares were down 6.3% at 459p.
Russ Mould, investment director at AJ Bell, said the fact that PageGroup and Robert Walters have both warned about major headwinds in the recruitment space and reported a big slowdown in earnings growth shouldn’t be a surprise.
"The large amount of gloomy economic data including deteriorating purchasing managers’ indices should give you some very strong clues about corporate confidence. Companies presented with a negative backdrop will think hard about their spending and that includes staff costs.
"The first step in a bleak situation is to normally hold off from replacing any staff who have moved on to another job. The second step is to make actual job cuts and it feels like we may be seeing the first small signs of the latter given talk of HSBC slashing 10,000 positions, HP reducing up to 16% of its workforce and British American Tobacco cutting 2,300 jobs.
"While PageGroup and Robert Walters are global businesses, they’ve both reported shocking numbers for the UK with declining profit. Brexit must be to blame as companies avoid making decisions on recruitment amid all the uncertainty. PageGroup has also flagged weaker confidence in China because of the trade war with the US and social unrest in Hong Kong."