Profits crash at recruiter Robert Walters

It was never going to be an easy year for Robert Walters (RWA). The recruiter reported a 10 per cent drop in net fee income in 2023, but operating profit plunged by 55 per cent to £26.3mn due to persistently high people costs. Headcount had decreased by 9 per cent by December, but across the year as a whole average staff numbers were actually up 6 per cent. 

Once again, permanent placements were the main headache – and this happens to be the biggest part of Robert Walters’ business. While the temporary jobs division remained (just about) in growth territory, fees from permanent roles fell by 10 per cent, as companies “sought out greater flexibility in their talent needs”.

There were some big discrepancies between regions too. Europe, which represents about a third of net fee income, edged up by 2 per cent year on year, but Asia Pacific, which generates 43 per cent of business, saw fees fall by 13 per cent. The UK was the worst performer, however, with fees down by 18 per cent. London was a particular problem area.

The outlook for Robert Walters is hazy. Management said trading conditions in 2024 remained “muted”, although management identified some “isolated pockets of growth”. Its smaller staff base also means costs should be lower for now. 

Management wants to maintain “core consultant capacity” though, as this should allow the company to bounce back quickly once macroeconomic conditions improve. Analysts at Investec described this as “pragmatic”, and forecast improved productivity in 2024.

The key question, however – which remains difficult to answer – is when the bounce-back will actually take place, and how strong it will be once it arrives. Hold.

Last IC View: Hold, 400p, 1 Aug 2023