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World – Korn/Ferry reports record growth in Q4

17 June 2014

Executive search firm Korn/Ferry International (KFY: NYSE) reported revenue of USD 260.8 million for the fourth quarter ending 30 April 2014, an increase of +9% compared with USD 238.6 million last year.

Operating income for the period rose by +59% to USD 24.5 million, up from USD 15.4 million in Q4 2013. The company reported net income of USD 21.2 million, a year-on-year rise of +74% from USD 12.2 million.

Gary D. Burnison, CEO of Korn/Ferry, commented: “Korn/Ferry closed out the fiscal year with a strong quarter, +10.7% growth in fee revenue for the quarter and +19.1% growth for the year, at constant currency, which represents the strongest top line results in the company’s history. Korn/Ferry’s performance is a testament to our differentiated strategy, robust intellectual property, and talented people.” 

On an annual basis, the company reported revenue of USD 995.6 million, up by +17% from USD 849.7 million in 2013. Operating income for the period more than doubled to USD 91.6 million, up by 109% from USD 43.9 million a year ago. Net income for the period rose to USD 72.7%, a year-on-year rise of +118% from USD 33.3 million in 2013. 

Broken down by business segment, Korn/Ferry’s Executive Recruitment division reported revenue growth of +12% to USD 153.7 million during Q4 2014, up from USD 136.8 million last year. Operating income rose by +7% to USD 28.4 million, up from USD 26.5 million a year ago.

On an annual basis, revenue derived from Executive Recruitment rose by +9% to USD 568.9 million, up from USD 522.5 million in 2013. Operating income rose by +44% from USD 81 million in 2013 to USD 116.4 million in 2014.

The increase in fee revenue during Q4 2014 was driven by increases in Europe, North America, and Asia Pacific, partially offset by a decrease in Latin America. This increase is primarily attributed to a +12.1% increase in the number of executive recruitment engagements billed, offset by a -3.4% decrease in the weighted-average fees billed per engagement in Q4 2014 compared with Q4 2013.

Revenue derived from the Leadership & Talent Consulting division rose by +10% to USD 66.2 million during Q4 2014, up from USD 60.1 million a year ago. Operating income for the period was USD 6.8 million, an improvement against an operating loss of USD 1.3 million last year.

On an annual basis, revenue derived from Leadership & Talent Consulting rose by +51% to USD 254.6 million, from USD 168.1 million in 2013. Operating income rose substantially by +272% to USD 23.8 million, compared with USD 6.4 million a year ago.

The increase in fee revenue during Q4 2014 was driven by increases in North America and Europe. The increase is primarily attributed to an increase in consulting fees revenue and an increase in product revenue compared with Q4 2013.

Revenue derived from the company’s Futurestep business rose by +18% to USD 38.7 million during the fourth quarter, up from USD 32.7 million last year. Operating income rose by +10% to USD 4.3 million, compared with USD 3.9 million in Q4 2013.

On an annual basis, revenue derived from the company’s Futurestep business rose by +10% to USD 141.4 million, up from USD 128.3 million last year. Operating income rose by +21% to USD 13.3 million, up from USD 11 million in 2013.

The increase in fee revenue was driven by a +16.8% increase in the number of engagements billed and a +3% increase in the weighted average fees billed per engagement in Q4 2014 compared with the same quarter last year. The increase was primarily attributed to large recruitment process outsourcing contracts entered into in the first six months of 2014, which continue to be delivered in the current quarter and an increase in professional recruitment.

Looking forward, the company advised that assuming worldwide economic conditions, financial markets, and foreign exchange rates remains steady, fee revenue in Q1 2015 is likely to range from USD 240 million to USD 250 million.

In trading yesterday, the company’s share price closed up +1% at USD 30.48, an increase of +38.3% compared with a year ago. Based on its current share price, the company has a market value of USD 1.5 billion. 

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