Shares in Robert Walters (RWA) seem to be bucking a weak recruitment sector in the wake of a negative note on Dutch firm Randstad from influential investment bank Goldman Sachs.

While the share price has stayed flat at 600p, valuing Robert Walters at £456m, larger operators Hays (HAS) and PageGroup (PAGE) are both off by a couple of percent on Tuesday.

In Robert Walters' favour is a solid second-quarter trading update showing a 7% rise in second quarter net fee income to £106.4m.

That rate of growth is more encouraging that it might at first appear. First, this is versus a particularly strong second quarter last year, when fee income shot the lights out with 16% growth.

Secondly, the UK continues to drag on performance.

The UK has slipped to third position in the regional ranking and now represents less than a quarter of total income. Despite growth in the regions offsetting some of the slowdown in London and the south-east, net fees were down 8% year on year last quarter.

Fortunately things are far brighter elsewhere with a 9% increase in fees from Asia Pacific and 13% from continental Europe. Japan remains the company’s biggest single market while France and Germany, which are both top 10 markets, bounced back from a sluggish first quarter.


As well as another record performance in Japan, where demand for bi-lingual recruits continues to drive up fees, smaller markets like Indonesia, Thailand and Vietnam are experiencing high growth rates while more mature markets such as Malaysia and Singapore are starting to pick up after a hiatus.

In Europe the gilets jaunes protests which impacted demand in France in the first quarter have given way to renewed hiring with fees up more than 15% in the firm’s largest continental market. Similar growth rates were seen in Germany, Holland and Portugal during the quarter.

North America also delivered a strong performance to lift fees from ‘other international’ markets by 18% despite a tough comparison with last year when fees from the same region were up almost 30%.

The group’s cash balance continues to grow, more than doubling to £53m at the end of June, as it negotiates better payment terms from its customers. At the same time headcount growth has slowed sharply as the firm retrenches in the UK while continuing to invest in fee-earners in its main markets.

As more than three quarter of fees are generated in foreign currencies, continued weakness in Sterling is a tailwind for the group and with Brexit anxieties set to increase over the summer this situation looks set to continue.

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Issue Date: 09 Jul 2019