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Staffing agency Robert Walters (RWA) has expanded into China and reported solid full-year results, but analysts remain cautious over a recruitment sector battling an economic downturn. The company is paying up to £1.4 million for a 70% stake in Talent Spotter, a Chinese staffing group specialising in professional services including engineering, sales and marketing. Asia Pacific is one of Walters’ fastest growing regions, having increased net fee income by 27% to £52.1 million last year, and also its largest source of operating profit.

Strong gains in Japan, driven by bi-lingual staff requirements rather than the economy, helped to mitigate a slowdown in banking in the UK, USA and Hong Kong. Chief executive Robert Walters says mainland Europe, particularly France, and Australia are also responsible for significant improvements in income from placing staff into new jobs. ‘We are conscious of economic problems around the world, but overall we’re not seeing this impact our business. There is a slowdown in permanent jobs in parts of banking, but this is a small part of our income,’ he says.

Group pre-tax profit for 2007 grew by 26% to £24.9 million. Stockbroker Investec liked the performance but downgraded 2008 pre-tax forecast by 17% to reflect tougher market prospects. ‘The recruitment industry has very little visibility and there is considerable uncertainty over the short-term outlook,’ says analyst Robert Morton.

Analysts at broker Altium voiced disappointment with a 10% increase in UK net fee income growth, but took a positive view on the company, saying its net cash is high compared to its market value.

Walters’ shares rose 10% intraday to 149.5p on the results.

Shares says: The numbers look good but the shares could stay under pressure until sentiment towards the sector improves.

by: Dan Coatsworth