(Reuters) - British recruiter Robert Walters (RWA.L) posted a 7% rise in second-quarter profit as strong hiring in Europe offset a slowdown in its home market due to uncertainty over Brexit.
Like other recruiters such as rival SThree (STHR.L), Robert Walters is increasingly dependent on international markets to drive growth as uncertainty over when and on what terms Britain will leave the European Union cools the job market at home.
The firm reported an 8% fall in net fee income in Britain in the quarter as companies hold back on hiring and people become wary of switching jobs ahead of Brexit now scheduled for October.
“Clearly -8% is not a good result,” Robert Walters Chief Financial Officer Alan Bannatyne told Reuters. “If you’re a candidate and read the newspaper, you’re going to think long and hard before you move jobs,” he added.
The company, which has 4,300 staff spanning 31 countries, had said in April that confidence among businesses was reasonable despite the Brexit uncertainty.
Recruiters have become important barometers of confidence in the British economy as uncertainty surrounding Brexit persists.
Robert Walters generates 76% of net fees or gross profit outside Britain, but Brexit has dampened the hiring mood.
It said overall gross profit rose to 106.4 million pounds for the quarter ended June 30. It also saw a recovery in France, its biggest European market, which was affected earlier in the year by the “yellow vest” protests.
“The UK is the main surprise with net fee income -8% (versus 10% Q1)...the weakness is (because of) big businesses in London where hiring decisions are on hold,” Liberum analysts said in a note.
The company, which places people in finance, engineering, legal and marketing jobs, said Europe net fees grew 13% to 27.7 million pounds.
Last week, recruitment industry group REC’s report said that the number of people hired for permanent jobs through recruitment firms in Britain fell for a fourth straight month in June.
“Brexit stagnation continues to seize up the jobs market as the slowdown in recruitment activity continues,” James Stewart, vice chair at KPMG, which produced the report with REC, said.
For temporary staff, hiring rose marginally in June, marking the weakest pace of growth since May 2013, when Britain’s economy began to emerge from the after-effects of the global financial crisis, the report said.
Robert Walters shares were unchanged at 600 pence.
Reporting by Sangameswaran S and additional writing by Noor Zainab Hussain in Bengaluru; Editing by Arun Koyyur and Emelia Sithole-Matarise