Recruitment firm Robert Walters (RWA) unveils record gross profit for the final quarter of 2017 in a trading update today.
In the three months to 31 December the company brought in £90.5m in net fee income. This is a 22% increase on the same period in 2016.
UK hiring slowed post-Brexit as both candidates and the firm’s clients were either reluctant to move or commit to hiring staff due to uncertainty.
This uncertainty seems to be receding, with the company’s UK profit up 13% to £26.2m on a year-on-year basis.
Robert Walters had already upgraded its full-year profit forecast twice in recent months. This has helped push shares to record highs and triggered analyst upgrades.
CEO of the company Robert Walters tells Shares that there is a shortage of candidates for jobs in FinTech, risk and cyber security. This suggests that the company can command high fees for placing candidates with these skills in the UK.
Given the global offering that Walters provides it always had some protection from UK economic risk and the majority of the profits still come from abroad. Asia Pacific is its most profitable enterprise bringing in £33.6m, a 6% increase on last year.
Its other international outposts, while making a more modest contribution, are also in the ascendancy. Net income is up 97% to £8.1m with North America being the strongest performer according to the company.
NO ALARMS AND NO SURPRISES
Given the stellar numbers the company reports, it may seem odd that its share price is down by 0.9% to 652p on Tuesday. However, since the start of the year shares have appreciated by 12.5% suggesting that these results were already being priced in by the market.
According to data from Reuters, Robert Walters is trading on a forward price to earnings ratio of 15.5 times. This is only slightly above the peer group average of 15.04 times.
Given Robert Walters has a net cash position of £30.7m it could engage in some M&A activity. The company says it prefers to grow organically but Alan Bannatyne, chief financial officer, adds management would ‘never say never’.
