Robert Walters UK profits tumble amid Brexit and political uncertainty

Recruitment firm Robert Walters has seen shares dive lower after revealing its UK profits plunged 23% amid Brexit and political uncertainty.

Shares dropped 7%, having slumped as much as 14% at one stage, as the firm reported UK net fee income tumbling to £20.7 million in the final three months of 2019 from £26.8 million a year earlier.

It said client and candidate confidence “deteriorated, across both recruitment and recruitment process outsourcing, due to the political uncertainty related to Brexit and the general election”.

The firm’s Asia Pacific division was also impacted by the political unrest in Hong Kong, with the market conditions there “extremely challenging” due to ongoing protests.

Its fourth quarter figures come after Robert Walters warned in October that annual profits were expected to flatline, blaming Brexit and political uncertainty elsewhere globally.

In the latest update, Robert Walters – chief executive and founder of the eponymous firm – said: “Trading conditions in the fourth quarter proved challenging with client and candidate confidence impacted by political turbulence around Brexit, the UK general election, Hong Kong protests and the US/China trade standoff.”

The update showed that in Asia Pacific, net fee income fell 4% and was 7% lower across its other international operations.

Despite a 4% rise in Europe gross profits – or 1% at actual exchange rates – there was a 7% drop overall across the group.

But Mr Walters said net fee income over the year as a whole is up 2% at constant exchange rates.

The group also confirmed a 5% reduction in its worldwide workforce to 4,027, with cuts focused on its Resource Solutions arm after it was impacted by a hiring slowdown across financial services clients.

While Robert Walters has suffered due to the UK uncertainty, the group has become increasingly international in recent years – with 78% of its gross profits now from overseas business.

Analysts at Liberum said: “The UK and Hong Kong in particular have weighed on Robert Walters’ net fee income performance in the fourth quarter, but tight cost control at Resource Solutions means that 2019 pre-tax profit expectations are unchanged, which we see as a good result.”