Anyone looking to recruiter Robert Walters (RWA) as a bellwether for the health of the British economy will have seen a different picture from the one presented by the International Monetary Fund. While the latter cut the UK growth forecast for the year, citing the consequences of last year's Brexit vote beginning to catch up, the former reported its third quarter of buoyant domestic trading. It followed growth in net fee income of a fifth during the first six months of the year.
UK net fee income was up 15 per cent during the three months to the end of September. Management attributed much of the growth to the strength of its resource solutions business – which provides a number of outsourced human resources services. In the core recruitment business, growth was strong in the regions, while in London the technology and legal sectors saw high activity levels.
The group increased net fee income by double digits across all regions, with Asia Pacific and Europe enjoying constant-currency growth of 14 per cent and 31 per cent, respectively. The 'other international' segment – the Americas, South Africa and the Middle East – grew by almost three-quarters, albeit from a low base. Management was confident enough to increase headcount by 6 per cent to 3,697. Meanwhile, it said the conversion rate – the ratio of operating profit to gross profit commonly used to measure recruiter performance – was expected to improve to 10.5 per cent from 9.5 per cent previously.
Robert Walters’ UK performance has been impressive given successive updates from the Recruitment and Employment Confederation. The industry body has indicated employer confidence in the UK economy is faltering, and candidate shortages in both temporary and permanent roles is gradually becoming more acute.
The contribution made by Robert Walters' resource solutions business was indicated when rival PageGroup (PAGE) reported a net fee income decline of 7.6 per cent in the third quarter of 2017, accelerating from 4.5 per cent in the second quarter. Management at PageGroup attributed the decline to client and candidate confidence being impacted by Brexit uncertainty.
However, Adrian Kearsey, an analyst at Panmure Gordon, said consumer confidence, while not at its strongest, remained stable. “We’ve had this uncertainty for over a year now and the consumer isn’t running for the hills,” he said.
Panmure raised its pre-tax profit forecast for 2017 to £35m from £32.9m following the announcement, citing the group's improving conversion rate. Analysts at Liberum also welcomed the announcement, increasing its 2017 and 2018 pre-tax profit forecasts by 6 per cent and 11 per cent, respectively.
