Robert Walters shares dive as recruiter predicts much lower annual profits

Robert Walters has warned full-year profits are set to be ‘significantly lower’ than expected as the economic environment continues to weigh on revenues.  

The London-listed recruiter posted a 10 per cent fall in net fee income at constant currency rates for the first two months of the second quarter.

Robert Walters said lengthier hiring processes and weak ‘candidate confidence’ levels witnessed in the second half of 2022 showed no signs of ‘sustained improvement’.

Competition for jobs is fiercer than ever, with close to a million Australians now unemployed and the labour market expected to remain weak for years (stock image)

Robert Walters shares fell by 15.2 per cent to 395p in early trading, meaning their value has contracted by about 23 per cent since the start of the year.

A global economic slowdown amid rising interest rates and elevated energy prices caused by the Ukraine war has led many companies to implement hiring freezes or job cuts.

In the UK, the labour market remains stubbornly tight with a shortage of workers and rising wages.  Vacancy levels are also now falling. 

Redundancies have particularly impacted the technology sector, which has announced about 370,000 globally in the past 18 months, according to the website Layoffs.fyi

Back in April, Robert Walters reported flatlining first-quarter gross profits, partly due to depressed recruitment activity in the UK and US tech industries.

Prior to 2023, the company had benefited from a white-hot global employment market as pandemic-induced labour shortages and major competition for talent encouraged employers to impose  wage hikes.

Workers were also quitting their jobs at increasing rates in order to find posts with much better pay and conditions, a phenomenon known as the ‘Great Resignation’.

For more specialist and high-demand roles, Robert Walters claimed that some businesses were offering 20 per cent salary bumps to people transferring jobs.

Last year was the firm’s best on record as revenue reached £1.1billion, and pre-tax profits rose by 12 per cent to £55.6million on the back of growth across all regions and forms of recruitment.

Though Robert Walters has seen trade subsequently slow, it noted that market factors such as candidate shortages and wage inflation remained strong, suggesting that ‘meaningful growth’ is likely when market confidence rebounds.

Today’s trading update is the group’s first following the departure of its namesake founder, who stepped down in late April 38 years after setting up the white-collar specialist.

Having survived the early-1990s recession, Robert Walters grew his firm into one of Britain’s most prominent headhunters that now employs more than 4,000 staff in 31 countries.

His successor Toby Fowlston joined the company in 1999 and previously ran the Robert Walters and Walters People global recruitment brands, as well as its Asia-Pacific division.

This post first appeared on Dailymail.co.uk