And why wouldn’t they? With a 40% net fee income margin (NFI – i.e. gross profit) in Asia/Pacific in H1 (to 30 June) vs. 26% in the UK, you can see where the ‘pull’ is for recruitment firm, Robert Walters. Indeed, the UK made virtually no pre-tax profit (£306k) vs a 5% margin (£5.8m) in A/P. UK NFI was nearly 5 points lower yoy, on a 24% revenue uplift (to £86m).
Elaborating on last month’s trading update (see UK still ‘difficult’ at Robert Walters), the eponymous CEO noted that the UK recruitment market was more about staff replacement than new hires, though demand was strong in ‘GRC’ (governance, risk and compliance) and Legal. But judging by the NFI margin hit, Robert Walters seems to be trading volume for profit in the UK – or perhaps the ‘replacement’ hires are coming in at lower salaries than those they replaced. Either way, tough market!
No wonder, then, that Robert Walters’ non-UK business now represents 74% of total NFI, up from 70% the prior year. For the record, headline revenues in H1 grew by 28% to £242m (25% at constant exchange rate). Gross margins dipped 140bps to 36.0% but better control of SG&A boosted operating margins by 20bps to 3.0%. EPS jumped 35% to 5.8p.