UK-based global recruiter Robert Walters Plc (RWA: LSE) reported revenue of £1.06 billion for the year ended 31 December 2023, a decrease of 3.2% when compared to the previous year.

Group net fee income was down 8% in constant currency (CC) to £386.8 million against a record prior year comparative, driven by softening macro-economic conditions in many of the group's markets as the year progressed.

Toby Fowlston, chief executive, said, "In what was a challenging year right across our industry, I'm very proud of the contributions of our people over the last 12 months. The international diversification of our business underpinned our resilient performance in 2023, despite labour demand contracting sharply across our markets. We have begun to undertake initiatives to significantly strengthen our business, which we expect to gain further traction over the medium-term.”

Fowlston added, “Our collective experience trading through previous market cycles tells us that when conditions do improve, the inflection can be rapid, and we therefore have strong conviction in our decision to maintain our core consultant capacity, whilst sensibly managing our cost base."

Operating profit was down to £26.3 million (2022: £58.2 million), reflecting the operating leverage impact of lower net fee income.

Headcount was down 9% year-on-year to 3,980 at period end (31 December 2022: 4,356), which the Group says reflects a balanced approach to maintain core consultant capacity in most resilient markets.

Net fee by income

Net fee income was down 9% (CC) year-on-year, most notably driven by Australia (-19%, CC) and Greater China (-19%, CC). North-East Asia (flat, CC) delivered a more resilient performance.

The Australia business was impacted by the notable cooling through the year in the wider Australian hiring market - a more material drop-off versus the 2022 peak activity levels than seen in other regional markets. 

Performance in Greater China did contrast slightly between H1 and H2, with notably impacted performance in the first half stabilising somewhat in the second half. Meanwhile, North-East Asia, the majority of which is the Japan business, registered the most resilient performance throughout Asia-Pacific, with H1 net fee income down 2% (CC), improving to growth of 1% (CC) in the second half. 

In Europe, net fee income was flat (CC) year-on-year, with an outstanding result in Belgium (up 21%, CC), strong performance in Germany (up 8%, CC) and good momentum in the Italy business offset by a more challenging market backdrop in the group's largest European businesses of France (down 3%, CC) and the Netherlands (down 5%, CC), particularly during the second half of the year.

Within Europe, Belgium was the standout performer, and the group, during 2023, with trading momentum accelerating as the year progressed (H1: up 14%, H2: up 28%, both CC) notably driven by its interim business which places mid to senior-level talent.

Meanwhile, in France and the Netherlands, good first half net fee income growth (up 3% in France, up 4%, in the Netherlands, both CC) gave way to a weaker second half performance (France: H2 down 9%, Netherlands: H2 down 13%, both CC).

In the UK, net fee income was down 18% year-on-year, with recruitment in London (down 29%) having the most challenging performance and recruitment in the regions seeing more resilience (down 7%). The Group’s RPO and MSP specialist, Resource Solutions, was down 16%.

London recruitment was not immune to the more challenging sectoral backdrop for the financial services and technology industries. Much lower levels of venture capital funding for technology start-ups acted as both a headwind on new vacancies, as well as driving job losses, with both client and candidate confidence severely impacted as a result. The legal and accounting disciplines held up better in London, albeit both saw some further softening in the second half compared to the first.

Performance in the UK regions was fairly even across the year, underpinned by accounting, where the Robert Walters brand has a long-developed specialism and is recognised as such by clients.

Robert Walters added that under new leadership as 2023 closed, the UK business will sharpen focus on productivity and cost management, while seeking to take further share across its key disciplines as market conditions continue to favour stronger players.

In Rest of World, net fee income was down 12% (CC) year-on-year, with challenging conditions in North America (down 40%, CC) and as faced by Resource Solutions (down 11%, CC) partially offset by growth in Mexico (up 68%, CC) and South Africa (up 38%, CC).

“Our Rest of World segment gives us good positions in some of the most attractive hiring markets of the future which, over time, have the potential to become good profit contributors,” the company stated.

The preliminary results announcement also provided some insight into the Group’s use of artificial intelligence. Over 1,000 Robert Walters employees have joined together as “AI trailblazers”, engaging with the Group’s own private version of Microsoft Azure Open AI Studio to propose, test and refine specific AI use cases for the business. Increasingly, consultants are incorporating AI to enhance job adverts and assist with sales outreach to name just a few examples. The Group expects this to gain further traction over 2024.

Fowlston said, “During the first few weeks of 2024, trading conditions across the group's markets have, consistent with the end of 2023, remained muted - albeit with some isolated pockets of growth. We have begun to undertake initiatives to significantly strengthen our business, which we expect to gain further traction over the medium-term and which we will set out in more detail at a Capital Markets Day in the autumn.”

“Our collective experience trading through previous market cycles tells us that when conditions do improve, the inflection can be rapid, and we therefore have strong conviction in our decision to maintain our core consultant capacity, whilst sensibly managing our cost base,” Fowlston said.

Robert Walters shares last traded at £416.75, up 0.91% on the day and 21.15% above the 52-week low of £344.00 set on 23 October 2023. The company has a market cap of £298.83 million.