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Recruiter Robert Walters posts record quarterly gross profit despite slowdown in UK jobs market

Robert Walters expects full year pre-tax profit to meet current market forecasts after a strong third quarter
Robert Walters
Shares gained 4% in morning trading

Recruitment firm Robert Walters PLC (LON:RWA) defied a slowdown in the UK jobs market to deliver a record quarter of gross profit.

The company posted net fee income – a measure of recruiters’ gross profit – of £101.2mln for the third quarter ended September 30, up 12% on the same period a year ago.

Legal recruitment particularly active​

The UK region achieved a 4% increase in net fee income to £27.9mln, led by growth in Birmingham, Manchester and Milton Keynes, despite weaker business confidence due to Brexit uncertainty.

Robert Walters said in the London jobs market, legal recruitment was “particularly active” while it saw “pockets of growth” in financial services albeit from a low base.

Asia Pacific was the main contributor to profits, with net fee income up 18% to £41.2mln, driven by a strong performance in Japan, Hong Kong, Indonesia, Taiwan, the Philippines and Thailand.

Net fee income in Europe gained 21% to £24.3mln with record performances in Germany, Portugal, Spain and the Netherlands. France, the group’s largest market in Europe, increased net fee income by 18%.

READ: Robert Walters shares jump as its hikes dividend by 45% after record first half

The other international segment, which includes Brazil, North America, the Middle East and Africa, was the only weak spot with net fee income down 2% to £7.7mln.

2019 earnings to meet market forecasts 

Chief executive Robert Walters said the company remains confident that profit before tax for the full year will be in line with current market expectations.

“During the quarter, we have continued to invest in further growing our international footprint with the opening of new offices in Geneva and Los Angeles and have also increased headcount in those markets and disciplines offering the best opportunities for accelerated growth,” he said.

"The group's truly global presence covering both emerging and established markets and our blend of revenue streams across both recruitment and recruitment process outsourcing means we are well positioned to further benefit from market opportunities as they arise."

Shares rose 5.5% to 675p in morning trading. 

Liberum maintains 'buy' recommendation 

Liberum repeated a 'buy' rating and target price of 775p on the stock.

The broker said while growth in the UK was marginally weaker than expected, it believes the company is well placed to deliver its 2018 forecasts, with the balance of risk lying to the upside.

"This dynamic combined with a better than expected cash position (£41.3m), should in our view result in the board more actively considering a share buyback programme – something it has looked to do in the past when the shares have appeared oversold on valuation grounds."

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