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Robert Walters rides the skills shortage – but for how long?

The second-quarter trading update suggests that recruitment activity levels have yet to trail off
Robert Walters rides the skills shortage – but for how long?
  • Skills shortage still in evidence across a range of sectors
  • Geographic spread irons out regional variations

On a day in which the UK’s political job moves dominated the headlines, Robert Walters (RWA) delivered a positive trading update, detailing what the eponymous chief executive termed “a record second-quarter performance”. The market responded positively, although the upbeat tone is at odds with the prevailing sentiment on the economy.

It is often said that the stock market doesn’t always reflect wider economic circumstances, but that might aptly be applied to the labour market as things stand. The question is how long the disconnect between levels of economic growth and job creation will prevail.

The chief executive confirmed that full-year profits are likely to be ahead of market expectations and that the recruiter has expanded staff numbers to “capitalise on the current demand for talent that exists across our global footprint and specialist disciplines”. It is true that the most successful recruiters in recent times have tended to focus on growth sectors of the jobs market, while simultaneously expanding and deepening their global footprints. However, even though we are still witnessing a skills shortage across a range of sectors, it is difficult to imagine that the recruitment environment will remain quite so febrile if we are forced to endure a lengthy bout of stagflation.

Nevertheless, the positive market reaction certainly reflects performance levels. There was increased recruitment activity across permanent, contract, interim and recruitment process outsourcing, with all but two of the group’s Asia Pacific markets delivering double-digit net fee income (gross profit) improvement. European performance was no less impressive, evidenced by runaway growth rates in Robert Walters’ largest continental markets – France, the Netherlands and Spain. Even closer to home, UK net fee income rose by 13 per cent to £20.4mn amidst a faltering economy. Overall, group net fee income for the second quarter was up by 25 per cent year on year to £112mn, 82 per cent of which was generated outside the UK.

All the same, the response to the second-quarter update needs to be set against the fact that the leading UK recruiters have lost around a quarter of their share value over the last 12 months.

Last IC View: Hold, 580p, 08 Mar 2022