Recruitment specialist Robert Walters (RWA) has delivered a solid trading update for the fourth quarter of last year with headline growth identical to the third quarter.

Net fee income came in at £102.3m in the final quarter, an increase of 13% marking the same rate of growth as the third quarter.

Its largest region Asia Pacific generated £40m of income, up 19% thanks to strong performances in China, Indonesia, Japan, the Philippines and Taiwan.

By coincidence, fees from Asia were also up 19% in the third quarter.

Japan is a key market for the firm and demographics are playing a major role as the shrinking working-age population is driving growth in recruitment.

European fee income rose 22% to £27.6m with strong growth in Germany, the Netherlands, Spain and Switzerland and record performances in Belgium and France.

Coincidentally, European growth in the third quarter was also 22%.

Tight labour markets and the fact that the firm is starting from a low base in Germany mean that despite signs of an economic slowdown fee income is set to continue rising.

UK FEE INCOME STILL GROWING SLOWLY

UK fees rose just 2% to £26.8m but given the effect that uncertainty over Brexit has had on companies’ hiring plans any growth at all is an achievement.

As in previous quarters, demand is led by hiring for audit, compliance, regulatory and technology roles and growth in the ‘northern powerhouse’ centred on Manchester is offsetting the slowdown in London and the south-east.

According to the latest Labour Market Outlook from the CIPD, around 70% of UK firms have vacancies or are reporting difficulty hiring.

At the same time close to half of all vacancies are reported as ‘hard to fill’ up from less than a third in the spring 2018 report.

The survey suggests that the UK labour market 'is coming up against supply constraints’ due to a sharp drop in the number of non-EU-born workers in the last year and a half.

In the 12 months to June 2018 the number of non-EU-born workers in employment fell by 40,000 compared with an increase of 225,000 in the previous 12 months, meaning that 265,000 people left the UK workforce.

According to the report there are few signs of new sources of domestic labour filling this gap and the job market is facing a major ‘supply shock’.

STRONG BALANCE SHEET AND DEDICATED MANAGEMENT

Thanks to its strong fee income growth, the group's net cash hit £74m at the end of December which is the equivalent of almost 18% of its current market value.

The shares have added just 1% on today’s trading update to 560p, compared with a September high of almost 800p.

In a recent interview with the Evening Standard, founder and chief executive Robert Walters said he has no intention of stepping down despite 33 years at the helm of the business.

As if to underline the point, he has been topping up his shareholding recently as shown by the Directors Dealing function on the Shares website.


Issue Date: 10 Jan 2019