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UK – Robert Walters reports growth despite weak Asia Pacific

03 March 2014

International recruitment firm Robert Walters (RWA: LSE) reported revenue for the year ending 31 December 2013 of £597.7 million, an increase of +7% in constant currency compared with £567.8 million in 2012.

The company reported a gross profit of £199.2 million, equating to an organic rise of +8% from £188.4 million a year ago. Net income for the period rose to £6.2 million, up from £4.9 million last year, an increase of +26% in reported currency.

The company maintained its balance of permanent and contract recruitment of 69% and 31%, respectively.

Robert Walters, the company’s eponymous CEO, commented: “Overall conditions for the period were mixed with some of the Group's markets showing clear signs of recovery, whilst others remained challenging. The last five years have been extremely tough for the recruitment industry but as demonstrated by this set of results, the Group continues to increase market share and has emerged from this period stronger than ever.”

“The Group benefits from a diverse geographical, discipline and sector business model and a well-respected international brand.  We have built a well-balanced blend of permanent and contract recruitment income streams and have successfully expanded our sector coverage beyond our traditional strength in financial services. In Resource Solutions, we have also created a market-leading and growing recruitment process outsourcing business,” Mr Walters added.

Robert Walters’ largest business segment, in terms of revenue remains Asia Pacific, despite reporting a -7.4% drop in reported revenue from £280.6 million in 2012 to £260.1 million in 2013. Gross profit for the region fell by -4% on an organic basis to £92.1 million, down from £93.4 million the previous year.

The company’s Japanese business delivered a record performance with the internationalisation of business driving strong demand for bilingual professionals. Operations in Malaysia improved and, according to Robert Walters, is a market leader in what is a rapidly developing recruitment market.  Market conditions in Singapore, Hong Kong, and China remained positive. The company also reported strong net fee income growth in its newer and smaller businesses in Taiwan, Thailand, South Korea, Indonesia, and Vietnam.

Market conditions in Australia, the region's largest market, remained challenging with the resources sector affecting confidence levels across the wider economy. The company’s offices in Brisbane and Perth were hardest hit, with the offices in New South Wales, Victoria, and South Australia were impacted to a lesser degree. The company has already taken steps to realign the business accordingly by reducing headcount by -18%.

In its home market of the UK, Robert Walters reported revenue growth of +22%. Revenue rose to £235.7 million in 2013, up from £193.2 million in 2012. The region achieved a gross profit of £57.2 million, up by +15% from £49.7 million the previous year.

In London, financial services hiring activity remained generally muted; however the company’s regional recruitment businesses - Manchester, Birmingham, Milton Keynes, and Guildford - produced a strong performance across all recruitment disciplines.

Revenue from other European operations increased by +6.9% to £93.9 million in 2013, up from £87.8 million in 2012. The company reported a gross profit of £42 million, equating to an increase of +2% on an organic basis from £39.6 million last year.  

In France, the region's largest business segment, the company claims to have increased its market share in a country where market conditions have arguably been toughest. Net fee income growth rates were strongest across the Group's Benelux operations. In Germany, the company continued to grow net fee income and reported encouraging signs from the company’s business in Spain. 

Robert Walters’ ‘Other International’ business segment reported revenue of £8 million during 2013, an increase of +31.1% from £6.1 million in 2012. The region reported a gross profit of £8 million for the year, an increase of +44% on an organic basis from £5.7 million the previous year.

The company’s ‘Other International’ segment comprises South Africa, the US, Brazil, and the Middle East. The South African business had an excellent year growing net fee income strongly. Improving confidence in the US helped boost activity levels in the New York office, and, according to Robert Walters, the technology boom in San Francisco shows no signs of abating. In Brazil, market conditions remain difficult but operations in Sao Paulo and Rio de Janeiro delivered solid net fee income growth. The Group recently opened a new office in Dubai, its first in the Middle East.

Mr Walters concluded: “Trading for the first two months of 2014 has been encouraging. Whilst we are seeing definite signs of recovery in some of our markets, others including major markets; such as Australia and France, remain challenging. The Group is well positioned to continue to deliver enhanced profitability in line with current market expectations.”

In trading today, the company’s share price remained unchanged at £3.58, an increase of +74.4% compared with a year ago. Based on its share price, the company has a current market value of £275.5 million. 


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