Recruiter FDM benefits from global skills shortages

There were no portents of impending doom in recent market updates from the world of recruitment. Yet, news that Robert Walters (RWA) had witnessed a discernible shift towards contract recruitment in the latter part of 2022 suggests that employers have become more wary about macroeconomic conditions.

Industry rival FDM (FDM) notes that those gathering uncertainties are evident in many of the regions in which it operates, but the recruiter has continued to see good levels of client engagement on the back of “structural and systemic skills shortages”.

The pandemic casts a long shadow, but you’re left with the impression that certain areas of the recruitment market will continue to experience elevated levels of activity, even if the global economy slows further. Part of this must surely reflect the ongoing digital transformation across a range of industries. But the point is that FDM has insulated itself to an extent against wider economic trends by adopting a flexible and scalable business model, the latter point borne out by the recent opening of new offices in Florida, Australia and Ireland.

The group registered a 19 per cent increase in constant currency revenues in 2022, while adjusted profits were 11 per cent to the good at £52mn. The North America segment delivered the most noteworthy performance, as evidenced by a 48 per cent increase in the number of regional consultants. Utilisation rates remain high despite an overall 22 per cent rise in the global headcount.

It would be reasonable to expect a slowdown in some corners of the labour market, but activity levels at FDM might suggest otherwise. The group’s shares change hands at 22 times consensus earnings, suggesting that the market is backing its near-term prospects. Hold.

Last IC view: Hold, 908p, 28 Jul 2022