Robert Walters blames ‘savage’ coronavirus for UK profit hit
Recruiter Robert Walters has bemoaned the “savage” economic impact of coronavirus as UK fee income slumped 29 per cent over the first quarter of 2020.
The recruitment agency is seen as an economic bellwether and took a hit from Brexit uncertainty and the lead-up to December’s General Election in 2019.
“It’s largely a hangover from a dreadful final quarter with uncertainties from Brexit to the election,” chief executive Robert Walters told Morning Wire “And then just when things were starting to look better we get clobbered by the virus.”
The FTSE 100-listed company’s UK performance, where fee income sank to £19.7m, dragged overall fee income to an 11 per cent year-on-year decline.
But the picture was bad across the board for Robert Walters. Asia Pacific income dropped five per cent in the first quarter to £34.5m and Europe experienced a two per cent dip to £25.4m.
Overall Robert Walters’ fee income dropped from £98.56m in the first quarter of 2019 to £87.4m in the opening months of 2020.
And rival Page Group saw profit drop 26 per cent last month, it revealed today.
“It’s savage for the recruitment market,” Walters told Morning Wire He said recruitment is still occurring in “pockets” via video interviews. But the economic fallout and the working from home directive means most firms have paused hiring.
The coronavirus hit to Europe began in February and worsened in March, but lockdowns are set to continue until at least the end of April.
Robert Walters ‘not at risk of cash burn’
Robert Walters has already furloughed staff in the UK but has so far avoided redundancies across its international workforce.
Last week it scrapped its 2019 dividend and slashed its cost base by over 15 per cent.
Chief financial officer Alan Bannatyne told Morning Wire the business could up those cost savings to 20 per cent with the UK’s furlough scheme, where the government pays up to 80 per cent of staff wages.
He also said Robert Walters is not at risk of burning through cash. But he did not rule out scrapping the 2020 dividend if the coronavirus crisis deepens.
“It’s just really a question of time and seeing how this plays out for 2020,” he said.
“The group has a strong balance sheet, strong cash position and an experienced management team,” Walters added. “I am confident that we will emerge from this period of uncertainty very well placed to benefit from operational gearing to quickly take advantage of the inevitable market opportunities.”