Robert Walters: Share price plunges for recruitment giant after warning of ‘significantly’ lower profits
Global recruitment agency Robert Walters shares nosedived this morning when markets opened as the staffing firm warned that its profits for the year would be “significantly” lower than previously anticipated.
Shares in the London-listed recruiter plunged by 15 per cent, however they have now clawed back to around 13 per cent, as the group posted a 10 per cent fall in net fee income rates.
Employers taking longer to make hiring decisions on potential candidates and reduced levels of “candidate confidence,” which Robert Walters first flagged in 2022, have been blamed for the impact on trading.
“Recruitment market fundamentals such as job flow, candidate shortages and wage inflation remain solid, suggesting that when market confidence recovers there will likely be a return to meaningful growth,” the firm explained.
The group also said it will look to take “appropriate cost reduction” to ease the short-term pressure.
The eponymous company has also recently waved goodbye to its longstanding chief and founder Robert Walters who stepped down earlier this year after 38 years.
Last year the group racked in £1.1bn in revenues as it was aided by a competitive market post-pandemic, especially in the tech sector.
However in January first issued a profit warning that its full year profits would be below prior expectations.
Economic uncertainty has impacted the jobs markets and has made employers more cautious about hiring.
Employees’ work attitudes have also altered post pandemic with many candidates now looking for more flexibility and hybrid working when choosing a job role.
“Businesses are watching their pennies in the current environment and there has been a growing trend, particularly in the tech and telecoms space, to cut jobs to try and become leaner entities, particularly after circa 18 months of intense cost pressures,” Russ Mould, investment director at Aj Bell said.
“In this scenario workers are likely to stay put rather than look for a new job, for fear they might join somewhere new and become the ‘last in, first out’ candidate if cutbacks are made later on. That’s bad for recruitment agencies because they thrive when there is a high turnover of people moving jobs.”