AJ Bell press comment – 11 October 2022
- 18% year-on-year increase in fees across the group but 6% drop in fees from the UK
- Headcount also increases for seventh straight quarter
- Although, rates of both growth and headcount increases have slowed this quarter
“The official data from the Office for National Statistics look strong, with joblessness at its lowest level since 1974 and job vacancies matching the number of unemployed but the third-quarter update from recruitment specialist Robert Walters raises a few more questions,” says AJ Bell investment director, Russ Mould. “The 18% year-on-year increase in fees across the group is a healthy number, even if it is the slowest rate of growth in six quarters. But it is the 6% drop in fees from the UK that catches the eye.
“Management puts this down to the tougher base for comparison – and the 17% growth generated in the third quarter a year ago had been the fastest rate of increase since Q1 2017 – but the UK has generally lagged Robert Walters’ overall pace of growth since summer 2016’s Brexit vote, after the initial surge that followed the referendum.
Source: Company accounts
“This won’t be an undue source of discomfort for Robert Walters, as the firm generates more than 80% of its fees from overseas. But it will have politicians, economists and central bankers on alert, especially as eponymous CEO Robert Walters does flag a softening in confidence in the UK jobs market, thanks to ‘the more volatile political and economic backdrop.’
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|
Year-on-year fee growth, constant currency |
||||||||||
|
|
Q1 2020 |
Q2 |
Q3 |
Q4 |
Q1 2021 |
Q2 |
Q3 |
Q4 |
Q1 2022 |
Q2 |
Q3 |
|
Asia Pacific |
(5%) |
(35%) |
(30%) |
(23%) |
(3%) |
48% |
54% |
56% |
37% |
20% |
16% |
|
UK |
(29%) |
(34%) |
(35%) |
(28%) |
(12%) |
9% |
17% |
7% |
4% |
13% |
(6%) |
|
Europe |
(2%) |
(32%) |
(27%) |
(27%) |
(15%) |
26% |
22% |
36% |
40% |
37% |
32% |
|
Other |
(6%) |
(36%) |
(22%) |
(28%) |
(25%) |
20% |
(6%) |
48% |
30% |
43% |
53% |
|
GROUP |
(11%) |
(34%) |
(30%) |
(26%) |
(11%) |
31% |
32% |
39% |
30% |
25% |
18% |
Source: Company accounts
“This further raises expectations for the Government and Office for Budget Responsibility statement on Hallowe’en, even if overall the recruitment company still sees shortages of candidates and strong wage growth. Both are good for its business, but both will be a concern to central bankers as they remain wary of the sort of doom loop which characterised the 1970s when galloping inflation begat lofty pay increases which further fuelled inflation and – understandably – prompted calls for further wage hikes.
“Overall, Robert Walters still seems confident in the outlook, and it is sticking to the raised profit guidance that it offered alongside its second-quarter trading statement in July. Analysts continue to look for a double-digit percentage increase in pre-tax profits as a result.
Source: Company accounts, Marketscreener, analysts’ consensus forecasts
“The FTSE All-Share constituent continues to increase headcount too and that is also a positive sign, even allowing for the softness in UK fee income. That is the seventh straight quarter in which Robert Walters has increased headcount and the firm’s consultant team now stands at levels last seen just before the pandemic, although some may note the pace of headcount increases is slowing a little on a quarter-by-quarter basis.”
Source: Company accounts
