Robert Walters (RWA: LSE), the international recruitment firm, reported net fee income fell by 16% in constant currency during its trading update for the first quarter ended 31 March 2024.

The decrease in constant currency (CC) was against a strong prior year comparative (Q1 2023 flat year-on-year v. Q1 2022), with trading conditions across the majority of the group's markets remaining consistent with those seen at the end of 2023.

Toby Fowlston, Chief Executive, said, "In-line with the latter part of 2023, overall trading conditions remained challenging during the first quarter of 2024. Although certain macro-economic indicators, such as inflation, continue to moderate in some markets, the general environment remains one where client and candidate confidence is at low levels, which we expect to continue to be a headwind to fee income growth in the near-term.”

Recruitment net fee income of £67.8 million was down 15% (CC), with permanent down 17% (CC) and temporary (contract and interim) down 10% (CC). Reflecting the typical profile, positive sequential progression in monthly net fee income was seen through the quarter.

Outsourcing (delivered through Resource Solutions) net fee income of £13.5 million was down 22% (CC), driven by lower volumes, particularly from financial services clients. The group noted that its Workforce Consultancy offering continues to resonate with clients, and fee income performance during the quarter exceeded expectations.

Headcount was down 4% quarter-on-quarter and down by 13% year-on-year to 3,812 (31 December 2023: 3,980; 31 March 2023: 4,403), as the group remains mindful of local market conditions.

Unless stated otherwise, all net fee income growth rates noted below are versus 2023 and in constant currencies.

In Asia Pacific, net fee income was down 16% (down 15% excluding outsourcing). The company achieved a continued resilient performance in Japan (-4%), with a more challenging trading environment elsewhere. Conditions in Australia (-23%) remain broadly consistent with those seen in 2023, while conditions toughened in New Zealand (-28%) following the late 2023 national elections. In Mainland China (+1%), the stabilisation seen through H2 2023 continued.

In Europe, net fee income was down 14% (down 13% excluding outsourcing). A resilient performance continued in Belgium (+2%), though this was more than offset by France (-15%), where conditions remain soft. Netherlands declined year-on-year (-12%) though continued to be broadly stable sequentially.

In the UK, net fee income was down 20% on a reported basis (down 27% on a reported basis excluding outsourcing). Trading conditions remain challenging, however, the group noted fee income grew sequentially in London for the first time in five quarters.

In Rest of World, net fee income was down 16% (down 9% excluding outsourcing), driven by the Middle East (-12%) and the USA (-15%), though partially offset by growth in the smaller markets of Brazil and Canada.

Fowlston added, “Given the current environment, we will continue to maintain tight cost discipline and we remain focused on initiatives to strengthen our business, ensuring we are optimally placed to take advantage as trading conditions improve."

Staffing firm rival PageGroup yesterday reported Q1 gross profit was down amid headcount reductions. Separately today, Hays also reported a fall in net fees while Gattaca reported a decline in revenue and net fee income. Robert Walters shares last traded at £371.76, down 4.68% on the day and 8.07% above its 52-week low of £344.00, set on 23 October 2023. The company has a market cap of £282.20 million.