Robert Walters (RWA: LSE), the international recruitment firm, reported revenue today for the six months ended 30 June 2023 of £548.3 million, up 1% in constant currency, when compared to the previous year.

Group net fee income (gross profit) was down 5% in constant currency to £202.3 million against a record prior year.

The company noted candidate and client confidence levels have yet to show sustained improvement across many of the group's markets and specialist disciplines.

Toby Fowlston, Chief Executive Officer, said, "The reduced client and candidate confidence levels that the group first signalled during the second half of last year have yet to show sustained signs of improvement across many of the group's markets and specialist disciplines.”

“As a result, group net fee income for the first half of 2023 declined 5% in constant currency against a record prior year comparative,” Fowlston said. “Contract and interim recruitment have outperformed permanent, as organisations increasingly sought more flexible solutions to their hiring needs.”

Robert Walters noted group headcount was up 6% year-on-year to 4,280 (30 June 2022: 4,051) but down 3% quarter-on-quarter, largely due to natural attrition, in line with more challenging trading conditions.

On a regional basis, Europe and Asia Pacific, which together account for 76% of the group's net fee income, proved to be most resilient with the group’s blend of permanent, interim and contract recruitment underpinning growth in net fee income across Europe in particular.

The UK, US and Mainland China businesses have been most significantly impacted by the lack of client and candidate confidence. The company stated, “We have been and are acting in each market to mitigate the short-term pressure but with a sensible lens to ensure we are still able to quickly take advantage of any return in confidence.”

Revenue by Geography

Unless otherwise noted, all growth rates below are in constant currency.

In Asia Pacific, net fee income decreased by 6%. The anticipated bounce-back of the Mainland China economy post the release of Covid restrictions has yet to materialise and has had a knock-on effect on market confidence across the wider Asia Pacific region, particularly in the economies of large trading partners such as Japan and Australia.

Net fee income in Mainland China was down 40% year-on-year, with the group's largest markets in the region, Japan and Australia, down 2% and 10%, respectively. Elsewhere across the region, net fee income in New Zealand increased by 12% year-on-year. 

Net fee income in the UK decreased by 15% (on a reported basis). Candidate and client confidence in the UK has been significantly impacted by the knock-on macro-economic effects of a high inflation and high interest rate environment. Job churn has declined year-on-year and time to hire has lengthened. Layoffs across the technology sector and volatility in financial services have also served to further disrupt market confidence across both London and the regions.

Net fee income in Resource Solutions was down year-on-year as clients reduced hiring volumes in line with the more challenging market conditions.

In Europe, net fee income increased by 5%. Eight out of nine markets delivered net fee income growth year-on-year. France, the largest business in the region, performed solidly increasing net fee income by 3% year-on-year underpinned by a good performance from interim and contract businesses. 

Spain experienced a tougher first half, with both net fee income and operating profit impacted by a slowdown in permanent hiring across the technology and engineering sectors, and Ireland, a technology and financial services hub, has also been negatively affected with net fee income declining 32% year-on-year. Net fee income in Germany was up 10%, year-on-year.

Rest of World comprises the Americas, Middle East and South Africa. 

The business in the US has been significantly impacted by the ongoing layoffs across the technology sector and the volatility and disruption in financial services. Net fee income for the half year was down 42% year-on-year following a tough period in the last six months of 2022. 

“Our Europe and Asia Pacific regions, which together account for 76% of group net fee income have proven to be most resilient, with the impact more acutely felt in our UK, US and Mainland China businesses, particularly across permanent recruitment, where confidence to hire and confidence to move jobs has been most noticeably affected,” Fowlston said.

"In the face of current trading pressures, we intend to protect the group's strategic core, focus on consultant productivity and sensibly manage our cost base whilst continuing to prudently invest in attracting and developing our people and our global infrastructure for the long-term,” Fowlston said.

Fowlston continued, "We have a strong global brand and balance sheet, a diverse international footprint, a healthy blend of revenue streams across all forms of recruitment and talent advisory solutions, all of which ensure we are very well placed to swiftly capitalise on a return of market confidence over the longer term."

The group said current trading remains in line with board expectations.

Robert Walters shares last traded at £401.50, down 2.55% on the day and 8.22% above its 52-week low of £371.00, set on 14 June 2023. The company has a market cap of £302.58 million.