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Executive search firm Korn/Ferry International (KFY: NYSE) reported revenue of USD 246.2 million during the second quarter ending 31 October 2013, an increase of +20.2% compared with USD 204.8 million for the same period a year ago.
The company reported an operating income for the three month period of USD 23.2 million, a substantial rise from an operating income of USD 2.8 million last year. Korn/Ferry achieved a net income for Q2 2014 of USD 18.8 million, up from USD 1.2 million a year ago.
Gary D. Burnison, CEO of Korn/Ferry, commented: “I am extremely proud of what Korn/Ferry has accomplished. The second quarter represented the strongest top line results in the company's history and represents a +23% year-over-year increase in fee revenue, or +8% excluding the prior year acquisitions, on a constant currency basis. Once again, we delivered strong margin expansion and earnings per share growth in the quarter. Our firm's alignment to broad talent management offerings is taking hold, as evidenced by our non-Search businesses generating 41% of the revenue mix aided by the performance of the prior year acquisitions – an all-time high."
"In the current economy, the winning companies will be those that can find and develop outperforming leaders in an underperforming economy. This environment is creating an opportunity for Korn/Ferry, as we help clients drive growth by more effectively linking their business and talent strategies," he concluded.
Executive Recruitment, Korn/Ferry’s most profitable business segment, reported revenue for the period of USD 145.3 million, a rise of +9.2% from USD 133.1 million last year. The business’ fee revenue increased organically by +11% to USD 140.1 million, driven by fee revenue increases in all regions, with the largest noted in North America and Asia. This increase is primarily attributed to a +12% increase in the number of executive recruitment engagements billed.
Executive Recruitment fee revenue derived from North America rose by +8% to USD 75.2 million this year, compared with USD 69.4 million last year. EMEA reported a +3% rise in fee revenue to USD 34.2 million. The biggest year-on-year rise was reported in Asia-Pacific, with growth of +18% from USD 18.3 million last year to USD 21.7 million this year.
The company’s Leadership & Talent Consulting business division reported revenue growth of +68% from USD 40.6 million last year to USD 68.2 million this year. Fee revenue increased organically by +73% to USD 66 million, compared with USD 27.6 million last year.
Revenue from Korn/Ferry’s Futurestep business remained relatively flat, year-on-year. Revenue rose to USD 32.7 million from USD 31.1 million. Fee revenue was USD 31.9 million during the second quarter of this year, an increase of +8% in constant currency, year-on-year. The increase in fee revenue was driven by a +4% increase in the number of engagements billed and a +2% increase in the fee billed per engagement, driven by increases in recruitment process outsourcing and non-executive and other professional recruitment.
The third quarter is traditionally a slow period for Korn/Ferry due to the heavy concentration of holidays, which results in lower productivity. Looking forward, and assuming worldwide economic conditions, financial markets and foreign exchange rates remain steady, the company expects to report fee revenue in the range of between USD 221 million and USD 237 million.
Despite the company’s positive performance, their share price fell by -1.9% to USD 22.50, an increase of +55.4% compared with a year ago. Based on its current share price, the company has a market value of USD 1.1 billion.