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World – Executive recruitment slowdown hits Korn/Ferry

07 December 2012

US-based staffing provider Korn/Ferry International (KFY:NYQ) reported on Thursday that fee revenue fell across all its operating regions, driven by a falling demand in executive recruitment seen in the three months to October (Q2).

Korn/Ferry International is among the 50-largest staffing firms in the world, according to research by Staffing Industry Analysts.

In the quarter, total fee revenue was down -2% to $196.2 million. In Europe, Middle East and Africa, fee revenue declined by -6% to $33.1 million. Hiring intentions also slowed in Asia Pacific where fee revenues fell by -16% to $18.3 million.

In North America, the firm’s largest market by sales, fee revenues also declined by -10% to $69.4 million while in its smallest market, South America, this figure dropped by -11% to $6.8 million.

The firm derives the majority of its sales from executive recruitment which was hit by a -10% fall in turnover during the quarter. Revenues in this division declined to $127.7 million from $142.5 million a year ago.

But the firm’s recruitment process outsourcing division (RPO), Futurestep, saw fee revenue rise by +5% to $30.0 million. This segment recently won a “major” RPO deal in Australia with infrastructure and finance business GE.

In the quarter, the recruiter also faced net restructuring charges of $15.5 million, including $11.3 million for workforce reduction and $4.2 million for consolidation of offices.

Shareholders seemed unimpressed with the financial results as the company’s share price dropped by -1.9% to $14.21 on Thursday, a -18.5% decrease from a year ago but +17.4% above the 52-week low of $12.10 seen in June this year. Korn/Ferry has a market value of €533 million. 

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