Robert Walters shares dive as recruiter predicts much lower annual profits
Robert Walters Shares Drop 15% After Earnings Warning as Recruiter Suffers from Weak ‘Candidate Confidence’ and Lengthy Hiring Processes
- Layoffs have particularly impacted the global technology industry
- In April, Robert Walters reported that first-quarter net fee income remained flat
- A global economic slowdown has caused many companies to halt hiring or cut jobs
Robert Walters warned that full-year earnings will be “significantly lower” than expected as the economic climate continues to weigh on earnings.
The London-listed recruiter reported a 10 percent drop in net fee income in the first two months of the second quarter at constant exchange rates.
Robert Walters said lengthy hiring processes and weak “candidate confidence” showed no signs of “sustained improvement” in the second half of 2022.
Competition for jobs is fiercer than ever, with nearly a million Australians now unemployed and the labor market expected to remain weak for years to come (stock image)
Sharing Robert Walterss fell 15.2 percent to 395 pence in early trading, meaning their value has shrunk by about 23 percent since the start of the year.
A global economic slowdown amid rising interest rates and increased energy prices due to the war in Ukraine has led many companies to halt hiring or cut jobs.
In the UK, the labor market remains stubbornly tight with labor shortages and rising wages. The vacancy rate is also falling now.
According to the website Layoffs.fyi, the layoffs have particularly affected the technology sector, which has announced some 370,000 layoffs worldwide in the past 18 months.
In April, Robert Walters reported flat Q1 gross profit, partly due to reduced hiring activity in the UK and US technology industries.
Prior to 2023, the company had benefited from a sweltering global labor market as pandemic-induced labor shortages and intense competition for talent encouraged employers to impose wage increases.
Workers were also increasingly leaving their jobs to find jobs with much better pay and conditions, a phenomenon known as the “Great Layoff.”
For more specialist and in-demand positions, Robert Walters claimed that some companies offered 20 percent pay raises to people who switched jobs.
Last year was the company’s best year with sales of £1.1bn and pre-tax profit up 12 per cent to £55.6m thanks to growth across all regions and forms of recruitment.
While Robert Walters subsequently saw trading slow, he noted that market factors such as candidate shortfalls and wage inflation remained strong, suggesting “meaningful growth” is likely when market confidence recovers.
Today’s trading update is the group’s first following the departure of its eponymous founder, who stepped down at the end of April 38 years after setting up the office specialist.
Having survived the recession of the early 1990s, Robert Walters rose to become one of the UK’s most prominent headhunters, now employing more than 4,000 people in 31 countries.
His successor Toby Fowlston joined the company in 1999 and previously managed the global recruiting brands Robert Walters and Walters People, as well as the Asia-Pacific division.